Likely to be no office space left in Homebush in a year: Report
There will likely be no office space left in the western Sydney suburb of Homebush in just over a year, according to the Property Council of Australia's Office Market Forecasts for July 2011.
The report forecasts available office space declining in Homebush to 0.5% by July 2011 and to totally dry up a year later.
Another market that will tighten considerably is east Melbourne, where the vacancy rate is tipped to fall to 2.3% by July 2012.
The report forecasts commercial rents in Sydney to reach $833 per square metre by July 2011, $837 per square metre in Perth and $700 per square metre in Brisbane, the three most expensive office markets in Australia.
According to serviced office provider Servcorp, high rents and tighter office markets are driving small businesses and micro-businesses out of the Sydney, Perth and Brisbane CBDs.
Taine Moufarrige, executive director of Servcorp, says the problem is a medium-term one and will take “more than a few years before the supply of premium space will even begin to meet demand”.
"Vacancy rates are getting lower and rents are going up," Moufarrige says. "There will be very limited affordable, well-located space available for small businesses, even in the fringe areas of the CBD."
Earlier this year, property group Knight Frank forecast “robust” nationwide growth in new CBD office space to taper off by 37% over the next two years.
According to Servcorp, the issue is exacerbated by the limited amount of construction to create more commercial space occurring in these high-demand areas.
“Brisbane in particular has focused on repair and reconstruction in the CBD following the January floods, without adding capacity,” Servcorp says.
Servcorp has noticed an increase in demand for serviced offices, “a clear symptom of the trend”.
“We’ve seen our mature floor occupancy across the country rising steadily since October 2010. Sydney and Perth have been showing particularly high rates of occupancy – consistently hovering above 90% during the past year,” Moufarrige says.