Strong demand drives rental growth in the south-east

​Sydney, 17 May 2016- The south-east has seen a strong start to the year with face rental growths in the office market, according to the latest CBRE research.

The Q1 2016 Office MarketView report states that both Sydney and Melbourne recorded a healthy growth. Sydney’s prime rents grew by 3.5% quarter-on-quarter, whilst Melbourne prime rents grew by 2% over the same period.

In contrast, net face rents remained static in Brisbane, Adelaide and Canberra in the first quarter, whilst Perth recorded a further decline with prime rents falling by 3.8%.

National prime net face rental growth (%p.a.)

National CBD net absorption rebounded in 2015 to 265,751sqm after a flat 2014, largely driven by significant annual absorption levels in Sydney CBD (157,150sqm) and Melbourne CBD (116,763sqm).

The national CBD vacancy rate increased to 10.9% at the end of 2015 and is forecast to increase to 11.6% by the end of 2016 following another year of high net supply additions for Australia’s CBD markets. A further 380,000sqm of net supply additions to the national market will see a rise in vacancy rates in the majority of capital markets. In contrast, a number of suburban office markets are expected to see tightening vacancy rates by the end of the year due to limited supply including Parramatta, Chatswood and Brisbane Near City and Southbank.