Education sector disrupting Melbourne's office space market
Education providers are looking to Australian CBD offices in an attempt to attract international students demanding improved safety, connectivity, and enhanced amenities, according to a new report compiled by JLL Research.
“Education has become the ‘sleeping giant’ of office demand,” says Darren Krakowiak, JLL’s Director of Tenant Representation.
The international student market is worth more than $30 billion a year to Australia.
In Victoria, strong state government investment in education has boosted student intakes by 5.8% per year from 2001 to 2017, exceeding the national average of 4.9% and increasing its share of national enrolments by 2.2 percentage points.
Much of this growth is in the international student segment.
JLL’s report, Sleeping Giant – Education sector demand in the Melbourne CBD, notes that Melbourne was rated third globally in the 2019 QS Best Student Cities Ranking.
“Over the last five years, the education sector accounted for 10.1% of Melbourne CBD office space take-up, up from 2.2% in the previous five years,” according to JLL’s Senior Director Strategic Research, Annabel McFarlane.
“This is placing pressure on the Melbourne office market and vacancy levels are close to a 30-year low in the second quarter of 2019 at 3.8%.”
Victoria University is consolidating its city campuses into City West Precinct, a 32-storey vertical campus due for completion late in 2021.
Monash College is taking more than 40,000 square metres of space at 750 Collins Street, Docklands, with other educators taking backfill space in repurposed offices and leasing space in clustered buildings.
Non-university educators are also strong players in the sector, with enrolments trebling in the 10 years to 2017.
These non-traditional institutions are also using the benefits of the CBD as a competitive advantage, and are key sources of demand for space in secondary office buildings, McFarlane said.
Along with the increased demand for university premises, there has been huge growth in purpose-built student accommodation in the Melbourne CBD, particularly at the northern end close to the University of Melbourne and RMIT.