CBRE recently released their Q4 Office Market View report, which revealed Sydney delivered the highest net effective rental growth of 5% in the closing months of the year, followed by Canberra at 4.8%.
CBRE Associate Research Director Felice Spark said the results came as the Australian office cycle reached the bottom – with the national office vacancy having peaked at 10.9% at the end of 2016.
“Brisbane and Perth are both considered to have reached their peak vacancy at the end of 2016, at 17.1% and 21.8% respectively, with Brisbane now at the bottom of the rent cycle and Perth expected to reach the bottom during 2017,” Ms Spark said.
“Sydney and Melbourne continued to see net effective rental growth during Q4, at 5% and 2% respectively.
"However, it was Canberra that surprised on the upside after recording the strongest white collar employment growth in the country.
"Increased demand from the public sector and limited vacancy in the prime end of the Civic precinct will all serve to support a positive outlook for the Canberra office market in the medium term.”
On a national basis, net office additions are expected to be nominal in 2017 at just 1,968 square metres following a two-year supply cycle during which just under 500,000 square metres of office space was added to the national market.
CBRE head of office leasing for Pacific Andrew Tracey said this was the first time in twenty years that such a small level of annual net supply had been added to Australia’s office markets.
“All CBD markets have limited new supply coming on line in 2017 and the level of activity in Q4 2016 was a big rebound,” Mr Tracey said.
“Occupier demand is expected to be solid in 2017 and we are forecasting the national office vacancy rate will decline to 9.9% by year’s end given the lack of construction activity.”
Vacancy rates are expected to tighten in all markets, most notably in Sydney, where the vacancy is expected to be just 3.5% by the end of 2017