Melbourne’s office market has strengthened over the past six months according to the Property Council of Australia’s Office Market Report.
Victorian Executive Director of the Property Council Jennifer Cunich said the overall rate has improved from 8.1 per cent to 7.7 per cent over the six months to January 2016.
“Melbourne continues to host the second lowest vacancy rate amongst all of Australia’s CBDs,” Ms Cunich said.
“A total of 71,768sqm of new stock is due to enter the market in 2016. No further space is in the pipeline in the short or medium term, although 466,637sqm is mooted for the market. During the last six months, supply additions grew by 45,069sqm while 929sqm was withdrawn. Net absorption was 55,857sqm.
“The Eastern Core and Civic precincts continue to have the lowest vacancy rates in Melbourne at 3.4 and 4.6 per cent respectively."The Spencer and Western Core precincts have double digit vacancy at 15.3 and 11.5 per cent respectively. Negative demand was concentrated in the Western Core and North Eastern precincts, although the Spencer precinct recorded positive demand against a backdrop of 45,069sqm of supply additions.
“St Kilda Road vacancy rates improved from 9.3 per cent to 8.9 per cent over the six months to January 2016 due to 15,685sqm of withdrawals," Ms Cunich said.
Southbank vacancy rates also improved from 8.7 to 8.4 per cent due to 3,587sqm of withdrawals. 51,000sqm of space is due to come online in 2016.
“Melbourne’s office market continues to enjoy positive demand, reflecting strong interest in the value of quality CBD office locations," Ms Cunich said.
“Future supply remains a concern for the sector with only 71,768sqm of new stock due to enter the market this year and none forecasted for 2017. Government decision-makers should note the forecast investment trends prior to finalising their response to the C262 central city planning reforms.
“The property industry would not recommend introducing development restrictions (C262) at a time when future supply growth is easing.”