Melbourne Market Update Aug 20

MARKET STATUS

  • A spike in Victorian COVID cases has highlighted the severity of COVID on the economy and property market remains uncertain
  • The biggest quarterly increase in Melbourne’s CBD office vacancy rates since the 1990’s recession reaching 7.7% Q2, 2020. This is due to the increase in sub lease space from organisations offloading excess space across multiple sectors
  • OUTLOOK:
    • The market is seeing more short-term renewals due to the COVID pandemic
  • An increase in demand from sectors such as Health and Community Services, Manufacturing, Consulting and Business Services organisations
  • A shift from smaller tenants currently in the CBD relocating to Metro and Fringe markets as they look to “cut the commute” and focus on suburban office locations closer to where their staff live.
  • Businesses will seek to look for hub and spoke / satellite office locations within the Metro and Fringe market also. These factors could see an increase in demand in Metro however this demand would be still weak
  • Many tenants will have a stronger preference for fitted space, with organisations looking at the short to medium term. The demand for fitted space will also increase to recycle existing fit outs and utilise the incentives on offer as rent free or abatement to offset operational costs
  • An additional of 3.4% of total stock is due over the next six months and will put an upward pressure on the vacancy rate in the short term

 

Vacancy rates in key areas *

East Melbourne 8.0% Southbank 4.0%
Melbourne CBD 7.7% St Kilda Road 5.0%
* Figures are based on TRS research Feb – Jul 20
Savings Guarantee

Start your savings journey today

CONTACT US