Office rental rates in Australia are expected to rise as the market finally shakes off the effects of the Global Financial Crisis.

The latest office vacancy data from the Property Council of Australia (PCA) indicates that the national office vacancy rate has dropped from 10 percent in July 2010 to 9.5 percent in January 2011.

CBRE Global Research and Consulting Senior Manager Luke Nixon said this was the first time vacancy has fallen since the six months to January 2008. Net absorption has also increased dramatically, with 299,373 square meters recorded in the six months to January 2011, well above the long term average.

“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,” 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."

CBRE National Director, Office Services, James Patterson said demand for office space had strengthened moving into 2011 and the expectation was more a much more active year in leasing markets across the country.

“Business confidence is certainly positive and in Sydney we have seen the financial sector active and taking extra space,” Patterson said.
“One simple barometer to follow in our market is when recruitment firms are expanding or merging or when break-away groups open up and that is happening in some major markets.”

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