Sharemarket volatility unlikely to derail office demand

Research5min15 October 2018By Dexus Research

Sharemarket volatility unlikely to derail office demand


Dexus Research today released its latest Dexus Office Demand Barometer which registered 1.4% in the September 2018 quarter, shifting mildly lower into ‘fair’ territory.

The Barometer uses lead indicators to assess the expected strength of leasing demand for office space in Sydney CBD.

The Barometer was impacted by weakness in the Australian sharemarket and a pause in the growth of job advertisements.

While office markets are sometimes sensitive to sharemarket trends, we don’t see last week’s sell down as a significant threat to office demand in the Sydney CBD given the otherwise strong business conditions and employment growth in NSW.

In fact, the barometer points to the likelihood of positive office demand in the Sydney CBD over the next year.

So far, the positive factors outweigh the negatives such as volatility in global markets, growing concerns about a trade war and a slowdown in the Australian housing market.

Actual take-up in the Sydney CBD has been constrained by a lack of available contiguous space. The vacancy has fallen to 4.7%, taking it to its lowest in eighteen years.

Demand has been led by the Property & Business Services and Information Technology industries.

The short-term outlook is supported by positive jobs growth in NSW with total employment rising by 3.9% in the past year.


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