Variation in Development Activity to Undercut Office Market Conditions

Source: http://ift.tt/1g1UR5T --- Tuesday, October 17, 2017
Despite conditions in Australia’s major CBD office markets remaining positive during October, there is significant variation in office development activity across Australia’s largest office markets. While Sydney and Melbourne office markets are performing strongly, the significant variation in office development activity will drive the largest divergence in market conditions since the late ’90s, according to Investa’s October 2017 Office Market Report. Office development in both the Sydney and Melbourne CBD markets are responding to prevailing tight leasing conditions. However, the magnitude of development in Melbourne will present it with the challenge of absorbing the equivalent of almost two-and-a-half times Sydney’s International Towers at Barangaroo from 2019-2022. [Related reading: Sydney And Melbourne Office Space in Demand: Colliers ; Brisbane Office Market Forecast for Growth ] Investa head of research David Cannington said a positive economic outlook will continue to support solid underlying demand for office space in the coming years, however Australia’s office market conditions have historically ebbed and flowed on development cycles. “Favourable prevailing conditions in both Sydney and Melbourne’s office markets are driving strong rental growth and capital returns. “A moderate development cycle in Sydney is expected to prolong the strong market conditions for another five years. However, Melbourne’s office market wi ...

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