Strong start to the year for office markets

Research10 min09 May 2017By Dexus Research

Strong start to the year for office markets
The Australian Real Estate Quarterly Review Q2 2017 with the focus this quarter on the positive outlook for office markets. 

Investors in office buildings are benefiting from a strong start to 2017, with double digit rental growth in Sydney and Melbourne.

Sydney CBD recorded just over 28% growth in net effective rents over the past year, the fastest pace of growth in seven years and most of the eastern seaboard office markets recorded solid increase in rents. The gains are being driven by a growing shortage of office space as vacancy rates fall below average.

It’s pleasing to see that the growth phase is now being realised. 

Our confidence in office markets was based on the knowledge that companies, particularly small companies, were hiring and that withdrawals of older office buildings would help offset new supply. 

Occupier demand was positive in all four major CBDs in the first quarter of 2017, including in Brisbane and Perth. 

With the next supply cycle several years off, the short term outlook is buoyant, particularly in Sydney and Melbourne, Australia’s largest office markets.

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