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Office market tightens, rents to go up

Perth's office vacancy rate has dipped to 9.5 per cent, amid signs of further tightening that will place upwards pressure on rents, new research says.
 
The Property Council of Australia's Office Market Report showed office vacancy rates across Australia dropped from 10 per cent to 9.5 per cent in the six months to January 2011.
 
Perth's vacancy rate dropped from 9.9 per cent to 9.5 per cent over the past year and it posted an Australia-high 4.5 per cent demand rate over the 12 months to January 2011.
 
The demand rate is calculated from the amount of space absorbed relative to the size of the market.
 
In total, 302,673 square metres off office space was absorbed across Australia over the six months to January 2011.
 
Property council chief executive Peter Verwer said the figures were driven by a resurgence in demand for office space, primarily from the resources sector.
 
"In a short period we have moved from a rapidly shrinking market to one in which demand is growing at almost twice the historical average," Mr Verwer said.
 
"Over the six months to January 2011, the lift in demand for office space was strong
enough to produce the first vacancy decrease in the Australian office market for three
years."
 
Mr Verwer said while future supply was unlikely to trouble the office market over the short to medium term, the recovery would be subdued.
 
A total of 472,161sqm of stock is due to be added to CBD markets in 2011
 
"These latest figures show the supply pipeline is reasonably balanced in major office
markets around the country, except for Perth and Canberra," he said.
 
"New supply for Australia's largest office market, the Sydney CBD, will be quite moderate over the short to medium term."
 
CB Richard Ellis research and consulting senior manager Luke Nixon said the Property Council data indicated rents would rise as the office market recovery took hold.
 
"Overall, net additions and net absorption are forecast to remain high in most CBD markets in 2011, with vacancy rates expected to continue their downward trend over the year," Mr Nixon said.
 
"Canberra is a notable exception to this and is likely to have seen the peak of the supply cycle in 2010. As a result most CBD's are seeing rents begin to rise and incentives have already begun to fall in the CBD's of Melbourne, Sydney and Brisbane CBD's."
 

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