Melbourne CBD Workplace Market Nonetheless Feeling Lockdown Ache

Tim O’Connor, Head of Office Leasing at JLL, said there has been a turnaround and leasing market sentiment has improved in the Melbourne CBD in the second half of 2021.

“A number of smaller organizations have delayed decision-making over the past 12 months and we expect strong activity in the sub-500sqm market group in 2022,” he said.

The latest figures from JLL show that the vacancy rate in the national office market fell by 0.4 percentage points to 13.7 percent in the fourth quarter of 2021, with a positive net absorption of 62,900 square meters in the CBD office markets from the 84,300 square meters allocated for the year were recorded.

CBD vacancy rates fell in Sydney (to 12.5%), Brisbane (to 15.5%), Adelaide (to 15.6%) and Canberra (to 5.7%). Perth had zero net absorption and vacancy was unchanged at 19.1 per cent.

“The Australian labor market has shown great resilience, with business surveys pointing to robust employment growth throughout 2022,” said Andrew Ballantyne, Research Director at JLL.

“In the past, employment growth has proven to be a leading indicator of demand in the office sector.

“While evolving work practices will have an impact on workplace design, our positive net absorption numbers show that a number of companies are increasing their footprint to accommodate headcount growth.”

Dexus head of research Peter Studley said that while the recent Covid outbreak from the Omicron variant would likely have a short-term impact on confidence, “much of the lost economic growth is expected to be recovered over the remainder of 2022”.

“Leasing markets are expected to be supported by positive business conditions, while low interest rates are likely to continue to support investment demand and real estate capital flows,” he said.