CBD property market demand spiking nationally

CBD property market demand spiking nationally

Following this year's Federal election, demand for CBD office space of all types has spiked across the country.

According to Colliers International's latest research demand for office space increased 8 per cent nationally fromQ1 2019 to Q2 2019.

Demand has increased for most markets around Australia except for Adelaide and Melbourne which remained relatively stable during the periods.

In Sydney, Colliers International recorded 269,392sqm of demand recorded in Q2 2019, a 28% increase compared to Q1 2019.

"Sydney has witnessed an increase in demand for office space of all sizes, including an 18 per cent increase in demand for space greater than 3,000sqm," says Colliers International managing director of office leasing Simon Hunt.

There was 88,645sqm of demand recorded in Brisbane in Q2 2019, a 61 per cent increase on Q1 2019. Notably, Brisbane has seen an additional 27,000sqm of demand for space above 3,000sqm since the beginning of the year.

Canberra saw a sharp 177 per cent increase in demand from Q1 2019 to Q2, with 32,500sqm of demand recorded in Q2.

"By area, the Government sector has been responsible for the greatest sqm amount of office space enquired for to date, however this comes with no surprise due to the Federal Election that occurred during Q2," says Hunt.

"Interestingly, in Q2 2018 there was no demand for space over 3,000sqm in Canberra compared to Q2 2019 where there has been 25,000sqm of demand recorded.

"In terms of average enquiry size, Canberra has seen the biggest increase mainly due to the large amount of enquiries for space over 3,000sqm from the Government sector, which is partly to do with the Federal Election."

Perth recorded 49,573sqm of demand in Q2 2019, a 4 per cent increase on Q1 2019 and witnessed a staggering 146 per cent increase in demand for space over 3,000sqm in Q2 2019 compared to Q1 2019, equating to an additional 10,100sqm.

Hunt says the 1,000-2,999sqm office market continues to be the sweet spot in 2019.

"Demand for workspace between 1,000 to 2,999sqm has increased by 38 per cent on area and 36 per cent on the number of enquiries year to date," says Hunt.

"The larger segment, of space 3,000sqm and above, has seen a decline and the smaller segment has seen a slight increase on prior year: 7 per cent on area and 2 per cent on number of enquiries.

"We believe that this is due to the tightening market conditions in all CBD locations and due to the fact that last year much of the demand was for space over 3,000sqm, compared to this year when  businesses are showing more of an interest for office space in the mid-segment."

The high level of demand for office space nationally has translated to a total of 368 deals for almost 265,000sqm of office space in 2019 to date. This is slightly down on the prior year on the back of several larger deals in Canberra and Melbourne CBD in 2018.

The report found there had been increased demand for metropolitan locations such as Brisbane Metro, Melbourne Metro, North Sydney and Canberra due to tightening market conditions in all CBD locations.

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