Currently, the property market is considered to be a ‘late cycle’, with lower clearance rates than the previous decade and the residential market in particular taking a serious hit. 

The commercial sector has, however, remained stable, and office space in particular looks set to boom in 2019. Strong employment growth and global business confidence in the Australian market are fueling this performance.

Demand for new office space was high in 2018, with the Property Council of Australia reporting that in the last six months of the year vacancy rates fell by 0.7% nationwide and we’ve seen this continue into 2019. 

Rates in Melbourne’s CBD dropped to 8.3% in the same timeframe, which is the lowest recorded since 2013. Unsurprisingly, the area was one of the most sought-after, with Sydney close behind with vacancy rates dropping to 4.1%.

Competition remains strong across Melbourne, continuing to push down vacancy rates but also increasing rental and purchase prices in major inner city hot spots. Investors and owner-occupiers face a choice - to spend significantly for prime real estate, or look further afield in growth suburbs where prices remain more affordable. 

Although rates are expected to remain low this year, Melbourne’s CBD is due to see a surge in supply over the next three years as builders and developers race to keep apace with demand. 480,000 sq m of new stock is expected by 2021 with pre-commitment currently sitting at over 55pc, according to the Property Council of Australia

The future is bright for office space in Melbourne and investors/owner-occupiers should consider the future pipeline when buying or selling today. Talk to us on 03 9654 2311 to learn more.