An upswing in demand for Australia’s metropolitan office markets is set to lead healthy activity in the year ahead, a new report reveals.
According to Colliers International’s latest metropolitan office report, Dial for Demand: Enquiry for Metro Assets on the Rise
, demand for office space in the non-resource exposed markets of Sydney and Melbourne reached record levels in 2014.
Just over 570,000sqm were recorded in Sydney and almost 400,000sqm in Melbourne, compared to 239,000sqm in Sydney and 278,000sqm in Melbourne in 2013.
However, Colliers International associate director of research Anneke Thompson said that while enquiry levels played a significant role in determining vacancy forecasts for Australia’s metropolitan office markets, the impact of future supply levels could not be underestimated.
“In Sydney, with supply levels moderate over the past two years, and this trend continuing into 2015, we expect vacancy to continue its downward trend,” she said.
“Even though an increase in supply levels is forecast for 2016, we expect overflow demand levels will be significant enough to absorb this, particularly given that tenants will have been starved of any significant new supply levels for a number of years.
“Melbourne’s metropolitan office vacancy rate has dipped to the lowest level it has seen since late 2011, however increasing supply levels will play a significant factor in this city.
“A large number of completions will hit the market in 2015, and while the biggest of these buildings are wholly pre-committed, there will be significant levels of backfill space available for lease, meaning the vacancy rate is forecast to climb again.”