Demand for office space in Brisbane and Melbourne has slowed, while in Perth it has held steady despite reports of the end of the mining boom and in Sydney the lack of premier office space means demand for such offices is robust, AMP’s head of property funds management, Chris Judd, says.
“In the short-term nation-wide the outlook [for office rents] is flat,” says Judd.
Across Australia the general office vacancy rate is 9 per cent, according to Judd. Vacancy rates in premier office space as encapsulated by Melbourne’s 101 Collins Street or Sydney’s Chifley Tower may be half that, he says.
AMP Capital Wholesale Fund will pay about $317 million for a 50 per cent stake in a yet to be built 37 level, 38,700 square meter office building at 200 George Street, Sydney. Construction of the building began in January and is due to be completed in 2016. Ernst & Young has committed to rent 74 per cent or 28,000 square meters of the building’s lettable space.
“There has not been a lot of premier development in Sydney for the last 20 years,” Judd says.