Sydney and Brisbane office rents cheap but growing: report

The Sydney and Brisbane office markets are entering an accelerated period of rental growth, according to a new global report by CB Richard Ellis.

The report also shows that Australia office rents are cheap by comparison to other key office markets, such as Hong Kong, Singapore and Mumbai.

CBRE ranks Brisbane and Sydney alongside Mumbai, Bangalore, Taipei and New Delhi in terms of rental growth potential in its latest Market View report of Asian Pacific offices for the March 2011 quarter.

Melbourne and Perth are further along the accelerated rental growth cycle, and rental growth in Canberra and Adelaide is slowing.

According to CBRE data, rents in Sydney grew three times faster (0.9%) in the first quarter of the year than they did between March 2010 and March 2011.

Brisbane office rental also remain strong, matching growth of 0.8% for the year in the first quarter of 2011.

The report says rental growth is gathering momentum in Sydney and Adelaide as landlords reduce incentives, while the development outlook for the Brisbane CBD and nearby suburbs is strong due to a lack of large office spaces in the CBD to meet demand.

Adelaide continues to perform strongly but is starting to slow down. CBRE data show that this market grew by 8.2% for the 12 months to March 2011, but by only 1.8% for the first quarter of 2011.

Perth has the most expensive prime office rents, averaging $650 per square metre per year, followed by Sydney at $607, Brisbane at $624, Melbourne at $434, Adelaide at $369 and Canberra at $352.

Australian office rents are cheap by comparison with the major metropolises in Asia Pacific.

Sydney’s average rent equates to an average of US$58 per square foot, but in central Hong Kong, by far the most expensive place to rent office space in the region, one square foot of office space costs US$186 per square foot. The next most expensive are inner Tokyo (U$124) and Mumbai’s Bandra-Kurla Complex (US$109.50).