The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
FIRST RELEASE TICKETS ON SALE FOR URBANITY-25 CONNECTING PROPERTY LEADERS ACROSS THE ASIA PACIFIC
FIRST TICKETS ON SALE FOR URBANITY-25 WHERE THE PROPERTY INDUSTRY CONNECTS
SEE DETAILSDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Partner Lab
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
7
print
Print
OtherTed TabetFri 02 Nov 18

Melbourne's Office Rents to Rise Sharply

48b43b65-b26c-449e-b98a-edca877f0629

Vacancy rates will continue to fall over 2019 as Melbourne’s office market peaks.

According to research released by Herron Todd White, the nation's largest independent property valuation and advisory group, limited new prime office supply will see vacancy continuing to tighten over the next two years, before rising again in 2020.

The high net absorption rate of prime Melbourne CBD office stock would also continue to place Melbourne CBD below Sydney at the lowest vacancy rate of all Australia’s CBDs.

“There is limited new prime office supply due for completion over the next two years before the large deluge of supply forecast for 2020 is due to come online, and that is going to continue to drive up rental levels,” Herron Todd White director of office valuation Jason Stevens said.

Melbourne, benefiting from a boost in Victorian population growth, recording net absorption of +79,800sq m in the third quarter, the city's strongest quarter in more than a decade.

The office vacancy rate for Melbourne CBD currently sits at four per cent, the lowest it has been in 30 years.

Related: National Office Vacancy Rates Tighten Due to Demand in Sydney, Melbourne

WeWork’s co-working office at Collins Street spans 11-storeys.Image: WeWork


Demand in the pre-lease market is now spilling into the fringe office market where vacancy has hit 6.8 per cent.

More than 50 office projects, comprising 615,000sq m, have had plans approved, submitted or proposed in the fringe precincts.

Commercial development sites across suburbs like Cremorne and Richmond have continued to drive strong capital growth with local agents now reporting net rents are in excess of $500 per square metre for new office space.

“Those factors – high leasing demand, strong underlying land values, and robust population growth - seem likely to continue to drive a very active investment and development market which is changing the shape of our inner suburbs,’’ Stevens said.

Another factor at play in the Melbourne market is the rise of co-working hubs, with players such as Hub Australia and US giant WeWork expanding rapidly.

The large wave of supply expected in the next few years has raised concerns about the capacity of the market and its ability to absorb that space.

Gross supply will increase by 170,000sq m in 2019 and by 290,000sq m in 2020. Net absorption, meanwhile, is forecast to be about 320,000sq m for the same period.

OtherOfficeAustraliaMelbourneSector
AUTHOR
Ted Tabet
The Urban Developer - Journalist
More articles by this author
website iconlinkedin icon
ADVERTISEMENT
TOP STORIES
Potts Point Coliving EDM
Exclusive

Co-Living Shrugs Off Stigma as Overseas Money Moves In

Clare Burnett
6 Min
Bankstown cbd in Sydney NSW EDM
Exclusive

Breaking Delivery Crisis Chokehold on NSW’s Biggest Housing Market

Vanessa Croll
7 Min
Healthscope Hospital EDM
Exclusive

‘Once-in-a-Decade’ Opportunities Rise in Wake of Healthscope Collapse

Clare Burnett
7 Min
Exclusive

Parking Upsize Threatens Fatal Blow to Project Feasibility

Phil Bartsch
6 Min
One New Zealand Stadium BESIX Watpac
Exclusive

Rising to a Challenge: How BESIX Watpac Topped Australia’s Builders

Clare Burnett
7 Min
View All >
A rendering of the top floors of SP Setia's Atlas skyscraper at 383 La Trobe Street, in Melbourne's CBD.
Residential

SP Setia Flags Changes to 72-Storey Melbourne Skyscraper

Marisa Wikramanayake
Potts Point Coliving EDM
Exclusive

Co-Living Shrugs Off Stigma as Overseas Money Moves In

Clare Burnett
Sponsored

RWC Retail Moves $30m in Regional IGA Sales

Partner Content
The three deals drew more than 1000 enquiries as investor interest in Queensland’s supermarkets runs hot…
LATEST
A rendering of the top floors of SP Setia's Atlas skyscraper at 383 La Trobe Street, in Melbourne's CBD.
Residential

SP Setia Flags Changes to 72-Storey Melbourne Skyscraper

Marisa Wikramanayake
3 Min
Potts Point Coliving EDM
Exclusive

Co-Living Shrugs Off Stigma as Overseas Money Moves In

Clare Burnett
6 Min
Retail

RWC Retail Moves $30m in Regional IGA Sales

Partner Content
2 Min
NDH Property Group, a joint venture partnership between Evri Group and KDN, plans for two 13-storey towers in part 2b of the linq development.
Residential

Next Stage of Belconnen Precinct Goes Public

Renee McKeown
3 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/melbournes-office-rents-to-rise-sharply