As the economy continues to grow, so does the CBD office space leasing market.
According to the latest report from Savills Research, the CBD contains 3,625,325sqm of lettable office space – the highest amount in five years.
Commercial redevelopment was a major contributor to this figure, with buildings such as 567 Collins St adding 45,000sqm of new office space upon its completion.
This trend is set to continue, with the partial redevelopment of Rialto Towers at 525 Collins St adding 6500sqm of office space by the end of the year. 5000sqm of this space has been let to the Bank of Melbourne.
Future development of 360 Collins St will see a further 6000sqm added to the market.
CBD office space sales saw an increase in the year to September, reaching a total of $2.15 billion. This was a $1.87 billion increase from 2015.
CBRE Melbourne sales manager Nick Lower said there was a noticeable increase in property enquiries alone.
“We’ve seen a significant spike in transaction volume and enquiry levels,” he said.
“The number of enquiries have been record breaking this year. Each time we launch a new campaign, there are floods of people coming back with enquiries.”
Of the sales reported, some notable purchases were the $157 million purchase of 380 LaTrobe St and the purchase of 114 William St for $175 million by Straits Real Estate.
Data on CBD leasing activity in the 12 months leading up to September show that it is up 109 per cent compared with last year.
The average capital values for A-grade properties within the CBD have also risen by 22 per cent over the last year.
According to data collected in September, capital prices for A-grade buildings are estimated to range from $7200 to $11,500 per square metre. Secondary graded buildings are estimated to range between $5000 and $6550 per square metre.
The use of this space is reportedly to come from: healthcare, which is expecting an increase in jobs of 6 per cent; finance and insurance with an expected growth of 5.4 per cent; and government, with an expected growth of 4.1 per cent nationally.