The valuation slump is expected to hit the office sector the hardest,with many towers having high vacancy rates,resulting in lower income,making them less attractive to investors if they are sold.
The yawning space in office towers across capital cities thanks to flexible working practices post COVID-19 has reignited the debate about whether these half-empty,billion-dollar valued skyscrapers can be converted into apartments.
Not so long ago an ageing retirement village would have been sold for redevelopment,but demand for beds is strong and building costs are so high,many are now getting a refurbishment and a fresh lease.
A swath of new leases have been signed in Sydney’s west.
Global advisory group Deloitte is set to welcome staff into its new office at Sydney’s gateway,Circular Quay,which will offer not just sweeping harbour views but all the amenities and technology needed in the new era of work practices.
Australia’s three-year electoral cycle means the Australian Electoral Commission can only sign up to three-year leases,and that relatively short lease term can chip away at a property’s value.
National office leasing is defying the odds with demand for space showing strong resilience despite challenging global business conditions,with deals being inked showing a rise in the first quarter.
Rents for office space in the nation’s CBD’s have been rising,but the increases have been tempered by incentives,such as a free office fit-out to rent-free periods.
Companies trying to entice workers back to the city for longer periods of time with nicer work environments is boosting demand for high-quality office space.
Property investors are caught in the cross-hairs of structural changes in the office market,rising interest rates,and turmoil associated with a loss in confidence in global banking.
Demand for office space in Sydney and Melbourne has not fully recovered as tech-sector redundancies and staff preferring to work at home weighs on the commercial property sector.