CBD Office Supply Forecasted To Drop In Coming Years

Australia’s Central Business District is expected to experience a drop in new office projects by 50% over the next three years. The recent report released by the Property Council of Australia revealed that the offices expected to be completed and ready for lease or occupancy between 2017 and 2020 was pegged at 462,000 square meters. This figure represented only half of the finished office spaces over the last year and six months.

The rate of slowdown differs from one place to another across Australia. Despite that, one thing is for sure. The drop in supply will greatly affect Sydney and Melbourne, both of which are currently facing low rental yields. Perth is also expected to face similar problems along with its current issues with its weaker sources sector. The Property Council Chief Executive Ken Morrison was quoted in a report released by The Australian that the nation’s central business districts are bound to have only a few available office spaces, a situation that would negatively affect their economy and market dynamics.


The latest office market report submitted by the Property Council showed that Sydney’s vacancies increased to 6.2% from 5.6% in a span of six months that ended in January. Despite the rise, the figure was still by far the lowest in all of Australia. Melbourne and Brisbane, on the other hand, posted a strong net demand, which was at a rate that was more than three times their historical average according to the PCA.

Melbourne And Brisbane

Melbourne enjoyed several advantages that were brought on by the city’s employment growth. The first benefit was that its office vacancy rate dropped to 6.4% from 7%. The data presented by the PCA indicated that Melbourne has three out of the four markets that have the lowest rates and these are East Melbourne, Southbank, and the CBD. On the other hand, Brisbane is facing quite a few problems as a consequence of lesser mining activities in the area. Its office market has been suffering from the repercussions brought on by the public service cuts implemented by the former state government. Although the metropolis is facing all these issues, it is still benefitting from its expanding economy. Its office vacancy rate also dropped from 16.9% to 15.3%. The decline was a result of the government’s decision to occupy more office spaces. Although this was good news, the figure was still higher than the rates reported by the other cities.

Canberra And Perth

Canberra also saw its office vacancy rate drop from 13% to 12.6% due to market withdrawal. However, the West Coast was not as lucky as Canberra. Its vacancy rates soared, especially in Perth. It reported an increase from 21.8% to 22.5%, the highest level in all of Australia. Meanwhile, Perth is expected to see lesser office space supply while continuing to struggle with the effects of the end of the mining boom.

Darwin, Adelaide, And Hobart

Darwin also reported a higher vacancy rate of 22.5% from 20.7%. Darwin and Perth experienced more issues with their lower-quality office spaces. This kind of workplace space had higher vacancy rates because of consumers can simply choose higher quality ones, which are also abundant in the area. Adelaide, on the other hand, peaked at 16.2% in 18 years. It increased from 15.4% and the rise was pinned on weaker demand and the inflow of new office space supplies. Finally, Hobart’s vacancy rate was pegged at 8.2%.