Australia Office Market Growth Beating Forecast

Source Bloomberg

Australia’s office market will recover faster than expected, driven by stronger business sentiment and jobs growth, according to a report by Colliers International Research.

“We now expect vacancy rates in several major CBD markets to peak by the end of this year, and others by mid 2011,” commercial research director Felice Spark wrote in Colliers’ latest CBD Office Markets Indicators report. “We may yet even see vacancy decline in some markets by the end of 2010.”

Earlier forecasts by Colliers estimated vacancies would keep rising until July 2012 in some cities, and a greater proportion of offices would remain empty at the low, spokeswoman Phoebe Miller said by telephone. Australian business confidence improved in February, according to a survey by National Australia Bank Ltd., and advertisements for job vacancies rose 19.1 percent, the biggest jump since at least 1999, a report from Australia & New Zealand Banking Group Ltd. showed.

“Tenant demand is generally stemming from companies in the professional services and financial services industries, who had put off expansion over the last couple of years,” Simon Hunt, managing director of office leasing at Colliers, said in the report.

The growth may start to push rents in some cities higher this year, Colliers said. Adelaide’s office market, which peaked at a 7.6 percent vacancy rate in January, is now on its way down, Colliers said. Sydney and Melbourne will peak at 8.6 percent and 8.3 percent, respectively, in mid-2011, from 8.1 percent and 6.6 percent now, Colliers said.

Perth and Brisbane will have the highest proportion of vacancies when they peak at the end of this year, at 13.6 percent and 12.3 percent, from 8.2 percent and 11.3 percent now. They were earlier expected to have rates as high as 16.8 percent and 14 percent, Colliers said.