A surge in demand in Perth and Brisbane helped push Australian office vacancies to a three-year low, the Property Council of Australia said in its Office Market Report today.
Vacancies across offices in city centers and suburbs dropped to 7.9 percent as of Jan. 1, from 9 percent six months earlier, as about 240,000 square meters (2.6 million square feet) of space was leased, the council said. Vacancies in Perth’s center more than halved to 3.3 percent, while in central Brisbane they fell to 6.2 percent from 7.4 percent.
“Perth and Brisbane outperformed expectations, with the resources sector continuing to expand strongly in both cities,” said James Patterson, Sydney-based regional director for office services at property broker CBRE Group Inc. “This shows the two-or-multi-track economy is not just an idea; it’s well and truly here.”
In Sydney’s central business district, where demand largely stems from the financial services industry, the vacancy rate climbed to 9.6 percent from 9.3 percent, according to the council. Foreign investment in Australian commercial real estate jumped last year to the highest level in 15 years, and will remain strong in 2012, as overseas investors seeking long-term holdings continue to be drawn to Australia’s transparent market, CBRE said in a report yesterday.
Across the country, 225,000 square meters of commercial space was taken off the market, a 50 percent increase over the six months, signaling “a new wave of refurbishment activity,” Peter Verwer, chief executive officer of the council, said.
Supply of space this year will rise by a third to about 800,000 square meters, with much of the increase in Perth, Adelaide, Canberra, Melbourne and Brisbane, according to the council.
“In 2012, tenant demand in Brisbane and Perth is assured given strong mining employment growth,” said Simon Hunt, Melbourne-based managing director for office leasing at Colliers International. Other cities, particularly Melbourne and Adelaide, “will also continue to benefit due to flow-on impacts to the domestic economy.”