The crash in commercial property vacancy rates has the potential to drive rents up, with tightening of capacity occurring to some degree across all Australian states and territories, according to the latest data from the Property Council of Australia.
In January 2007, PCA measured overall vacancy ratesfor commercial buildings in the Sydney CBD at around 8 per cent and onlyslightly higher in
Commercial rents will likely start to climb within thenext 12 to 18 months, with this market always “lagging the residentialincreases in rent”, according to David Bolt, a Director of North Sydneycommercial property real estate agents Hartigan Bolt.
In his analysis of the figures, Bolt said thetightening market means businesses in both Sydney and North Sydney CBDs areradiating out to St Leonards and Chatswood “because they can no longer findwhat they want closer in”.
“The market is tightening – the vacancies from thelast two or three years are now going away,” Bolt said.
He points out the factors driving low commercialvacancy rates are a combination of low levels of new property constructionpaired with high levels of expansion within businesses, which are in the midstof an extremely positive economic cycle and now deciding to upsize theirbusinesses to take advantage of these conditions.
Bolt attributes much of the capacity constraint to ashortage of suitable sites and also to restrictive council planningrestrictions which severely limit the number of appropriate sites because ofbarriers to re-zoning for commercial use.
“Companies are finally taking more space and movingpremises,” he said, but many are now finding the options are not as broad as inthe past, particularly within the preferred centrally located areas.
In particular, businesses working in the construction,infrastructure and engineering sectors are adding staff and expanding rapidly,buoyed up by what he describes as a “huge non residential building boom goingon in