Property Times

Melbourne CBD offices : new supply drives vacancy upwards - Q2 2013

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The Australian economy continues to record positive growth, however momentum remains slow. National GDP growth in Q1 2013 was recorded at 0.6%, on par with the Q4 2012 result. The Victorian economy recorded comparatively strong quarterly growth in state final demand, increasing by 0.8% over the quarter. However in annual terms the state economy contracted by 0.7%. State unemployment was recorded at 5.7% at the end of Q1 2013.

Following the addition of 30,000 sq m in Q1 2013, the second quarter has seen three large developments with an approximate total of 130,000 sq m reach completion. This represents the substantial majority of new supply for the year, with only a further 26,000 sq m expected over the second half of the year. In contrast to the past two years, supply is expected to be comparatively muted in 2014 – two new buildings totalling 70,000 sq m are expected for the year.

Lack of tenant demand combined with a large amount of new supply entering the market has negatively impacted rents, resulting in a small amount of rental decline over H1 2013. However, growth is expected to return in 2014 in light of stronger economic growth and limited new supply.
Investment in Victorian real estate was recorded at $484m in Q2 2013, down by 60% from the substantial peak in Q1 of $1.2bn. The office sector continued to be the most liquid asset class, accounting for $342m. There was less activity in the retail and industrial sectors, which together accounted for the remaining $137m of investment over the quarter. Looking to the future, the high level of competition and limited availability of prime CBD assets is expected to drive modest yield compression into 2014.

Source : DTZ (Groupe UGL)

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Mots-clés : DTZ

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