Office towers hang out the house full sign with record low vacancies


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Overall, the national vacancy rate decreased marginally over the last six months to 8.3 per cent compared with 8.4 per cent in the previous period, the report said.

While there is new supply of towers coming onto the markets, mainly in Melbourne, a significant amount has already been pre-leased.

In Sydney, space available dropped marginally to 3.2 per cent, while Melbourne had the lowest record level of 3.2 per cent. In the suburban markets, East Melbourne was the best performing market with 2.4 per cent vacancy, followed by Sydney’s Parramatta at 3.2 per cent and Chatswood at 3.7 per cent.

One of the latest deals is by Dexus Property which has signed a lease with law firm Ashurst for the new South Tower at the $1.5 billion 80 Collins Street, Melbourne development.

Ashurst will join fellow legal firm Herbert Smith Freehills in the same tower for a lease of 10 years across 4427 square metres over three levels of the 35-storey tower.

There is also an existing 47-storey adjoining tower, a new retail podium and a new boutique hotel in the Dexus and Dexus Wholesale Property Fund-owned complex. Overall the office components are close to being fully leased.

“Our office markets are a great economic barometer of our cities and these numbers show good demand for quality office space in most centres around the country,” Ken Morrison, chief executive of the Property Council of Australia, said.

“Last year saw a rise in inquiries from government, with a number of major requirements coming to market and strong demand in the sub-10,000 square metre bracket,” Nick Evans, Colliers International head of Government Property Services and Strategic Accounts, said.

“This was driven by lease expires, the establishment of the new Property Service Provider (PSP) arrangements and ongoing improvements to the way government property is managed.”

Justin Lam, Colliers International associate director of Tenant Advisory, said almost 50,000 sq m of office space transacted for the flex-space sector with approximately 18,000 sq m in the Melbourne CBD, and just over 10,000 sq m in Brisbane CBD.

“Although demand remains buoyant from flexible workspace operators, deal flow and new acquisitions have certainly slowed, following an unsuccessful IPO attempt by WeWork in 2019,” Mr Lim said.

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