Melbourne office leasing picks up outside of CBD
Office buildings outside of the bustling capital city CBDs are securing strong sales and leasing as small to medium businesses chase lower density in the increasingly post-pandemic world.
The Melbourne strata office market outside on the city’s outskirts is performing better than its Sydney counterpart, JLL’s national head of leasing Tim O’Connor said.
“It’s not a one-size-fits-all market,” Mr O’Connor said.
“In Melbourne, we are seeing strong activity outside of CBDs, which in some ways is opposite to Sydney.
“You have different profiles in metro Melbourne, whether they are the types who love Richmond and Carlton or want to go further out for affordability and cheaper rents.”
In contrast, Sydney’s three-month lockdown saw stronger restrictions in the city’s west, which were deemed “areas of concern”.
This label also captured Parramatta, which has long been emerging as an office hub. But Mr O’Connor expects the metro marked in the capital to bounce back as confidence rises.
Chief operating officer of Perth-based property developer Cedar Woods, Patrick Archer, said small to medium businesses were leading the return to the commercial property market, showing a preference for non-CBD office space.
“Now, more than ever, businesses are looking outside the CBD for office space with the expanding number of businesses operating in the west seeking an opportunity to work close to home, without compromising on amenity,” Mr Archer said.
It’s not just leasing either. Sales are strong within Cedar Woods’s new seven-storey, $32m office building, Boston Commons.
Located 20km southwest of Melbourne’s CBD, at Williams Landing, it will be the fifth stand-alone office building in the growing town centre and comprises 60 strata office suites.
According to Knight Frank’s associate director Matthew Romanin, the Boston Commons pre-launch campaign was one of the most successful launches he has run in the Melbourne strata office market, with more than 30 per cent sold within the first two weeks.
Many of the purchasers work in the finance and IT sectors.
“With interest rates so low it’s now cheaper to buy than to rent offices,” Mr Archer said.
Significant local amenities have already been delivered to support the growing commercial hub including a train station, shopping centre, medical facilities, dining, and surrounding parklands.
In terms of the CBD market, Mr O’Connor expects a longer road to recovery.
“Going in to 2018/19, Melbourne had a broader and deeper demand base than Sydney,” he said.
“But, I think there will be considerable pent-up demand. We will see confidence spread.”
Mr O’Connor also noted the metro market of Brisbane was also performing well outside of the city centre.