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While the Australian market displays growth, office rents have touched bottom in some major US markets
OFFICE RENTS in Sydney might be increasing, but not so those in the United States nor, closer to home, in New Zealand.
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According to the CB Richard Ellis (CBRE) Global Office Rental Cycle report for the September quarter, prime Sydney rents have increased slightly for the first time since 2009 to average $709 per square metre.
CBRE regional director James Patterson said a gradual recovery was underway in the city’s CBD market.
“In Sydney, leasing activity has begun to pick up, although vacancy continues to increase as a result of newly completed stock being brought to the market,” Mr Patterson said.
“As employment growth is expected to continue into 2011, a further recovery in rents in the prime CBD market is anticipated.”
In the United States and New Zealand, however, office rents continue to decline.
A deterioration in economic conditions combined with a decline in market confidence is behind rental declines in Auckland, according to the report. Prime rents are down by 0.6 per cent in Q3 to NZ$359 per square metre.
In the US, while many markets are experiencing rental decline, latest figures show those declines are levelling off in major cities such as Washington DC and New York, which have now reached the bottom of the rental cycle, according to CBRE.
In Washington DC, vacancy rates have declined almost two percentage points to 10.3 per cent over the past six months – the largest decline of any US office market, the report says.
As economic sentiment improves in most regions of the globe, occupier demand is beginning to show signs of picking up, CBRE global chief economist Dr Raymond Torto said.
“More companies are looking to expand and net absorption is positive in a number of office markets this quarter, including Hong Kong, Washington DC and London’s City and West End districts,” Dr Torto said.
“A change in the supply/demand balance means that most of the key markets in Europe and Asia are now showing some degree of rental growth,” he said. “There is also an expectation that rental growth will accelerate over the coming months.”
