Financial services sector driving demand for office
Hiring intentions of Australian financial services institutions is driving demand for CBD office space along the eastern seaboard, new research reveals.
Data from the CBRE Q1 Office MarketView report revealed that one-in-four enquiries about office space in Sydney's CBD in the first three months of 2015 had come from insurers and financial services providers.
CBRE regional director of office services, Andrew Tracey, low interest rates and the decline in the Australian dollar were supporting business and financial services, delivering a positive impact on the office markets.
"Economic improvement is centred on Sydney and Melbourne, resulting in strengthening leasing activity and direct take-up, led largely by IT, education and finance sectors," he said.
"In the Sydney CBD, enquiries from the IT sector rose 220% over 2014, and has remained a key source of demand in 2015 to date.
"Additionally, close to 25 per cent of all enquiries in the first three months of 2015 was from the finance and insurance sector, following from 31 per cent growth over 2014. This supports the notion that financial services is on its way to reaffirming its place as the most significant driver of demand in this market."
Meanwhile, CBRE research associate director, Claire Cupitt, reported that the rising levels of white collar employment over recent months had seen strong absorption in the Sydney market, with vacancy rates falling one per cent in the second half of 2014, to 7.4 per cent. And dipping to 7.2 per cent in Q1 2015.
She also revealed that CBD office rents had remained steady in Sydney over the first three months of the year, while the North Sydney market had seen growth of three per cent.
Cupitt added that prime office yields had retained a firming bias in Melbourne, averaging 6.5 per cent, while the Brisbane office market remained "relatively flat" to the end of March.
AUTHOR
Nicholas O'Donoghue
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