Prime CBD rents are on average 1.7% above their peak rents and will continue to grow in 2018. In Q3 2017, prime CBD rents grew 3.3% year-on-year whereas non-CBD rents are rising at a slower pace than previously anticipated.
Non-CBD rents increased 1.7% year-on-year and are on average 30% cheaper than the CBD. Tenants are choosing to pay the higher rents for good quality assets instead of relocating to secondary or non-CBD locations.
The average vacancy rate across our survey area fell to 6.9% yoy. The vacancy rate has been falling consistently since 2010 with the majority of markets already at their historic low.
Tenant incentives are going down and tenants need to start their search early when relocating. Serviced office providers are providing short-term, temporary solutions to the office shortage with tenants choosing short to medium lease terms instead of committing to longer leases in a less-than-desirable building or location.
Source : Savills