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Who Will Be Able To Afford Sydney Office Space In 5 Years?

Office-Buildings

The increase in urban living in the world’s top cities will see prime office rents reach record highs by the end of the decade, according to new research from Knight Frank.


Knight Frank’s inaugural Global Cities Report 2015 assesses the effect on the office market of more than 1.1 billion new city dwellers forecast for the next 15 years.


The Knight Frank Global Cities Index, tracking the prime office rents in 15 Global Cities, is forecast to see growth of 19.9% over the next five years. The Index is forecast to rise above its pre-GFC peak sometime in mid-2015.
In the rental forecast period (2015-2019), Sydney dropped one place to 5th position (2nd for Asia Pacific), whilst Madrid climbed 13 places to emerge second in the rental forecasts, behind San Francisco which topped the chart throughout the decade.




“Premium pricing for real estate is found in the cities with the most high value knowledge workers, which consequently attract the world’s leading corporations. These are the ‘Global Cities’ and they are impossible for a property investor or developer to ignore due to their size,” said James Roberts, Head of Commercial Research at Knight Frank.


“Our data illustrates the opportunity for property investors and developers who are in a position to exploit the growing trend for urban living across the globe.


“There was US$202 billion of global commercial real estate investment in 2009 and we forecast this amount to increase to US$606 billion in 2015."


Restricted supply of new office stock in conjunction with a heightened demand for commercial space will see vacancy rates diminish in all the top 10 cities globally by 2019 with the average vacancy rate at 6.3%, down from 7.8% in 2014. Vacancy rates in Tokyo and London will drop to just 3.9% and 4.4% respectively in 2019 – the lowest among the 15 Global Cities.


Over the last five years, eight of the 15 Global Cities registered negative growth in office rents; five of these cities were in Asia. Singapore and Madrid which bottomed the list between 2009 and 2013 demonstrated the greatest rental volatility and estimates for 2014 are both reflecting strong growth (9.8% and 16.3% respectively).

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Article originally posted at: https://https://theurbandeveloper.com/articles/who-will-be-able-to-afford-sydney-office-space-in-5-years