One of the great surprises of the pandemic has been the resilience of commercial office rentals with new data from the Property Council of Australia showing demand is increasing.
While the national office vacancy rate rose from 11.9% to 12.1% during the six months to January, it was due to an increase in supply rather than a drop in demand.
Underpinning the performance of commercial property as an investment class, demand for office space across the country’s business districts, demand rose 1%, and 0.7% in non-CBD markets.
Property Council chief executive Ken Morrison said that despite the rise of work-from-home, the death of the office has been greatly exaggerated.
“The supply of office space across Australia has been above the historical average in three out of the last four reporting periods,” he said.
“This means that since the onset of the pandemic, office developments have continued to come online, and demand for it has largely kept up.”
Mr Morrison said this was in stark comparison to the 1990s recession is stark when vacancy rates blew out by a massive 15.6% over three years.
“During the two years of the COVID-19 pandemic, vacancy rates have shifted only 3.3%,” he said.