Burgeoning education sector dominates Melbourne leasing market
Property and business services along with government/community organisations have been the key drivers of Melbourne’s CBD office leasing market over the last five years, according to Savills Australia research.
The two sectors accounted for a combined 70% of square metres leased in the 12 months to June while the finance & insurance sector which in 2012 accounted for 38% of CBD leases has fallen to just 8%.
According to Savills’ Victorian head of research, Glenn Lampard, the figures reflect the divergent policies of Liberal and Labor governments, the rapid rise of the education sector and the enormous amount of money that has been poured into property investment over recent years.
The burgeoning education sector had been a key driver of the progressive rise in the amount of space being taken up by the government/community sector with student numbers nationally on track to reach a new record of circa 660,000 by year’s end (based on March quarter Department of Education data) with the bulk of those students in Sydney and Melbourne.
"As is usually the case the election of a Labor Government saw an increase in public service numbers and necessarily, the amount of space leased, while the lure of Melbourne’s highly regarded education sector coupled with the fall in the Australian dollar has bolstered an already strong education sector.
"Property and business services have also been boosted by the movement of the dollar which has helped to drive the strongest property investment market in a decade,’’ Mr Lampard said.
He said the apparent collapse in the finance and insurance sector’s share of the leasing market was a product of the major institutions, including NAB and ANZ, having concluded long term leasing agreements in the year to June 2012, requirements which would not come back to the market for several years.
Melbourne’s education market accounted for upwards of 300,000 square metres, a market which, according to 1987 figures, accounted for only around 20,000 square metres of CBD space.
Mr Lampard said the CBD fringe market had shown a similar profile with Property and Business Services (47%) along with Government/Community tenancies (28%) accounting for 75% of the market and Finance & Insurance, which peaked in 2012 at 36%, taking just 9% of leases concluded in the 12 months.