Office Market Monitor | 2022 9 Over the first six months of 2022, almost 320,000 square metres of supply was added to the market, around 83% of which was new supply, and 75% of which was in CBDs. In the CBDs, the major new buildings to complete were Quay Quarter Tower (87,000sqm) in Sydney and 80 Ann Street (44,000sqm) in Brisbane. The major contributor to non-CBD supply was Parramatta Square Stage 8 (53,000sqm). Over 150,000 square metres of new supply is due to complete in non-CBD markets in the second half of 2022, with this supply spread across many buildings around the country. However, construction delays may cause building overruns and we expect some of these completions to happen in early 2023. Completions in CBDs for the second half of 2022 could total around 165,000square metres. Cbus Property’s 83 Pirie Street (30,000sqm) is due for completion in Adelaide, as well as Salesforce Tower (55,000sqm) in Sydney, 72 Northbourne Avenue (33,000sqm) in Canberra, and Wesley Place Stage 2 (22,000sqm) in Melbourne. Beyond 2022, there is only 220,000 square metres of CBD office supply under construction, 57% of which is in Melbourne. There is almost 1 million square metres of projects that have planning approval or are undergoing site works, but almost all these projects will require a substantial tenant pre-commitment before developers commence construction. This is why building completions over 2024 to 2026 will be very low, as those developments need pre-commitment now, and this is very hard to come by. Interestingly, the focus of developers for longer term projects is shifting considerably to Sydney Metro and Brisbane CBD markets. This is where the bulk (55%) of projects due to complete in 2024 and beyond will be located. This is in response to both the demographic trends of strong internal migration to Queensland, and also as more people prefer to avoid the time it takes to commute to the big CBDs of Sydney and Melbourne. Supply and vacancy Source: Property Council of Australia Note: The percentage (%) figures in the table represent the percentage of total new supply to be completed during that period. Forecast New Office Completions* by Market, 2022 to 2024+ 2022 2023 2024+ Sydney CBD 28% 7% 20% Sydney Metro 16% 19% 31% Melbourne CBD 4% 18% 8% Melbourne Metro 8% 2% 4% Brisbane/Gold Coast 19% 8% 24% Adelaide 6% 13% 2% Perth 3% 22% 4% Canberra 16% 11% 8% The new office supply pipeline is noticeably constrained, post 2024, as pre-commitment activity was soft throughout Covid and into 2022. This outlook is not unexpected after many years of strong supply, particularly in Melbourne, and a demand ‘shock’ in the form of Covid.
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