Tenant demand for office space has lifted an average of one percent across Australia’s CBDs in the six months to January 2022.
The Property Council of Australia’s latest Office Market Report tells the tale of a sector that’s defying predictions of a pandemic-led collapse.
Tenant demand has lifted one percent in each of the nation’s CBDs and 0.7 percent in non-CBD markets. Every capital market outside of Sydney and Brisbane has recorded demand increases higher than their historical average.
“Many expected this once in 100-year global pandemic to cause a major spike in office vacancy,” says Council chief executive Ken Morrison. “These figures show that hasn’t eventuated.”
Aggregate vacancy levels have risen from 11.9 percent to 12.1 percent, though Morrison puts this down to an increased office space supply, not a drop in demand.
“The supply of office space across Australia has been above the historical average in three out of the last four reporting periods, which means since the onset of the pandemic, office developments have continued to come online, and demand for it has largely kept up,” Morrison says. “The data matches what we’re hearing, and that is that tenants clearly see collaborative and well-designed office space as a key component of their ‘new normal’ of working.”
While buoyant from the resilience of the office market, the Council has joined the call for strategies and incentives to reinvigorate Australia’s CBDs when the health situation allows, pledging its support for these efforts.
It was a different story in Melbourne six months ago. In the Council’s six-month reporting to July 2021, vacancy rates in the CBD had grown two percent to 10.4 percent, the highest rate since 2000. This was due to decreased demand, which also broke records as demand hit its lowest rate since 1996.
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