The outlook of the commercial property sector in 2019: Melbourne, Sydney and Brisbane
Regardless if you’re a landlord, a tenant, a real estate representative or a barista working in the heart of these CBDs, you would know the pressures on commercial office spaces in the current Australian climate in some way shape or form. These commercial spaces are in incredibly high demand, yet such low supply — it’s got everyone talking… and concerned until 2020/2021 arrives.
In a recent trend and outlook report released by Cushman & Wakefield Australia, the commercial property sector is in for some big changes in 2019, both good and bad. Here are our four key takeaways from the report.
Vacancy is still a problem
It’s no surprise that vacancies are still so tight in the bustling CBD areas. However, the squeeze is starting to feel especially cosy in Sydney and Melbourne, with a further decline in vacancies for these two major cities. Melbourne may get a little relief, as vacancy rates are expected to rise marginally, despite the vacancy rate dropping well below the predicted 6 percent, at 3.6 percent this year.
Brisbane still remains the most tenant-friendly city in which to find new office space.
Lack of negotiation flexibility
With the Sydney and Melbourne CBD vacancies at near record tightness, the disparity between tenant and landlord flexibility is greater than ever. The negotiations on any new space are extremely difficult when deciphering what tenants want, and what landlords are willing to offer.
Sydney tenants have become much less flexible in the negotiation of their needs and the Landlords don’t consider themselves flexible either. It’s face rents that are driving the negotiations.
In Melbourne, it is appearing even tougher as the landlords are not flexible when it comes to these leasing negotiations, and neither are the tenants as they want greater incentives.
Brisbane is still considered to be the most flexible city to negotiate an office lease on the market.
Assets are important
In the commercial property realm, tenants have the opportunity to be choosy when it comes to their surroundings, especially given the prices they are forking out on rent. It is reported that natural light and open plan facilities have risen to tier one concern for these working professionals, and have become the highest attribute in leasing terms.
Secondly to this, financial affordability, value for money and geographical location are still concerns for tenants, followed by building quality, size, and services.
So, what next?
Navigating the great divide when it comes to tenant expectations and landlords rules is no easy feat. At CR Commercial Property Group, we specialise in reducing occupancy costs, locking in competitive rates for our clients and cutting out painful approval processes. As the saying goes – it’s not what you know but who you know, and the relationships that exist with the right people.
Given the difficulty of the markets, it doesn’t need to be harder than what it already is. CR Commercial Property Group provides unparalleled tenant advisory and tenant representation services for our clients in Sydney and other capital cities around Australia. We help you decide whether to stay or go in these markets, secure the best financial outcome and or redesign your office plan to most space efficient and effective use. All without business disruption.
Get in contact with us today to see how we can assist you.