Australian Office Market Insights – December 2024

What is happening right not in Australia's office market? We've summarised the National Office Overview report recently released by Jason Stevens of Herron Todd White below.

• Office Space Australia: Vacancy Rates Remain High: National office vacancy rates increased slightly to 13.6% (July 2024), up from 13.5% in January and well above the 8% pre-pandemic level (January 2020).

• Hobart Leads, Melbourne Lags: Hobart boasts the lowest vacancy rate at 2.8%, while Melbourne and Adelaide report the highest at 18% and 17.5% respectively.

• Premium Office Space in Demand: Companies are shifting focus to premium and A-grade office spaces, which exhibit lower vacancy rates. In contrast, secondary spaces struggle, contributing to elevated vacancies.

• Flat Rental Growth with High Incentives: Rental rates remain stable with incentives exceeding 40% in some CBDs, limiting face rental growth and curbing potential rental increases.

• Economic Uncertainty Impacts Values: Inflationary pressures and high interest rates are driving cautious investor sentiment, leading to softened yields by up to 250 basis points and weaker office property values.

• Distressed Sales Influence Valuations: A rise in distressed transactions distorts market valuations, adding complexity to an already subdued market.

• Office Space Australia: Transaction Activity Diverges by City: Sydney, Brisbane, and Adelaide are seeing modest transaction increases, while Perth and Melbourne are experiencing declines in activity.

• Volatility Expected to Persist: Weak economic conditions and high vacancies are likely to maintain market instability through 2024 and beyond.

Office Space Australia: The Takeaway

With elevated risks and shifting dynamics, investors and occupiers must adopt strategic, well-informed approaches to navigate the evolving office market.

In today’s volatile office market, securing the right financial structure is critical to achieving your investment goals. At CapStack, we specialise in sourcing and structuring tailored finance solutions that align with your vision, whether your'e navigating distressed asset opportunities or planning upgrades to premium office spaces.

Reach out to the team to discuss how our expertise and lender relationships can help you unlock value and position your portfolio for long-term success. Let’s build the future of your commercial property investments together.

Why CapStack?

When it comes to securing the right financing for your business or commercial property acquisitions and projects in Australia, CapStack is the partner you can trust. With unparalleled expertise, a vast network of lenders, personalised service, and data-backed insights, we are committed to your success. Get in touch with CapStack today and unlock the full potential of your commercial ventures with our expert property finance services.

CapStack can assist with bank, non-bank, or private financing. Start here to connect with us and send through some basic information to get the ball rolling or email us directly. Our lenders are Australia-wide and ready to fund investments acquisitions and development projects. CapStack help's developers and investors fill their capital stack by providing access to the capital puzzle piece they are missing. CapStack works directly with developers and investors who need access to capital markets.