THE CBD VACANCY rate for Sydney currently sits at 4.1%. And for Melbourne, it’s now at 3.8%.
As you would expect, overseas events have caused some hesitancy in the market. And the Sydney CBD can be rather sensitive to the global economy.
That said, recent reports show local business confidence growing – with stability appearing to return, after the recent election.
Even so, you will notice from this graph that all other capital city vacancy rates still remain above the 10% level.
According to earlier research by CBRE, most capital cities tend to have a major exposure to one or two key sectors:
- Sydney has the Financial & Insurance sectors
- Brisbane and Perth … Mining & Manufacturing
- Canberra … Technology & Public Service
- Adelaide … Defence & Technology
Whereas, Melbourne has always had a very diverse demand profile – spread across the Technology, Professional Services, Construction, Finance and Education sectors. As such, it never seems to reach the highs (nor the lows) of the other capital cities.
And even though Melbourne is entering a development phase between 2019-2021 … already 75% of that offfice space is pre-committed. Plus, there is also strong enquiry to backfill the space being vacated.
Bottom Line: You will continue to see a two-tiered market for Offices around Australia.
Assuming no global hiccups, Sydney offices should remain buoyant – moving to a seller’s market. Whereas Melbourne could enjoy a greater balance between buyer and seller – but with some solid growth in rentals, over the next 12 to 18 months.