Whils’t housing prices are headed south in every Australian city, commercial real estate is still booming! It’s simple economics, demand outstrips supply. Melbourne’s CBD vacancy rates are at 3.2%, forecast to reach 2.7% in the next 12 months, the lowest in Australia. Subsequently rents keep on rising. Even with half a million square metres being added to the market over the next 3 years, 80% of this new space has already been leased.
And it’s not just office space. Sydney hotels have a sky high 85% occupancy rate which is a recipe for potential takeovers and asset price inflation.
We are also changing the way we work, fueling extra demand for office space. Demand for co-working space has sky rocketed throughout Australia. A growth of 300% in 5 years taking up almost 200,000 square metres. Flexible hours and agile workplaces are increasing demand for office space as we move towards a more mobile workforce.