With hundreds of office floors in Sydney now left empty and CBD vacancy rates hitting the double digits, developers and investors are looking toward residential suburbs.
Looking at all the Australian office market’s building transactions across capital cities throughout the 2022 calendar year to date, a huge 76% were located in non CBD markets, data from the Centuria office fund reveals.
This is likely attributed to the ongoing desire to remain working closer to home as part of the new normal flexible working model.
The value of these non CBD transactions accounted for 54% of the total value of office asset investments this calendar year.
Centuria’s head of office Grant Nichols, told the SMH the tide is turning in Australian office markets, with both investors and business tenants having a stronger preference for non CBD spaces.
Leasing giant Colliers echoes this sentiment with national director of office leasing and capital markets, Rob Joyes telling the SMH suburban office owners have been the fortunate beneficiaries post pandemic in a resurgence of demand for office space.
He continued, “The forced lockdowns of 2020 and 2021 thrust upon our workforce has translated into a high desire for people wanting to live and work in proximity to each other…The convenience factor of a shorter daily commute along with the benefits of everyday retail nearby has been a key driver”.
Aside from offices, cafes and restaurants are also living in fear of the ghost town central business districts. Many CBD based eateries are facing rocketing costs of produce and a dwindling customer base.