Low rates driving up commercial demand

by Julia Corderoy23 Jul 2014
Commercial demand is hitting new highs, driven by low interest rates.

The Colliers International Office Demand Index has hit a record high, with businesses enquiring for 687,000 square metres of office space nationally over the June quarter. ThinkTank executive director Per Amundsen told Australian Broker the commercial lender has seen this lift in demand flow through to its business.

“We have seen an increase in demand from both investors and owner-occupiers who are running their own small and medium sized enterprise. Often in the latter case, they are buying their own business premise, where they may have been renting before. They are finding with low interest rates and the high yields that it is really financially advantageous to buy at the moment,” Amundsen said.

Amundsen said SMSF borrowing is also a major driver of commercial lending.

“One of the other things we noted is that people who own their own businesses are increasingly using their self-managed super funds to buy these business premises. It’s not speculative borrowing, but long term planning for retirement," he said.

Colliers International said the growth in commercial demand was due to businesses wanting to take advantage of low interest rates.

“Businesses are increasingly entertaining the prospect of moving, as opposed to previous years when the focus was predominantly on renewing at the most economic terms… Tenants are now looking to make the most of current market conditions to upgrade their office space, and newly-built, speculative fit-outs present a great opportunity for them to do so," Colliers senior executive of corporate solutions Alexandra Brown said.