The Office Market Continues To Bounce Back
After a tough few years for CBDs around the country, office markets have closed out 2022 in a positive fashion and look set for a strong 12 months.
According to Ray White Commercial, office assets represented 34.2 per cent of all commercial property sales during 2022, up from 27.2 per cent last year.
Ray White Commercial Head of Research, Vanessa Rader, said confidence in the office sector is coming back despite headwinds with low occupancy levels across the county.
“In 2022, the swing has certainly moved back to office transactions with a high number of larger institutional, REITs, and offshore buyer groups competing for major CBD holdings setting new highs in values,” Ms Rader said.
“Many businesses have been grappling with what their future accommodation needs may be during this post-COVID economy which sees some staff working from home on a part or full-time basis.
“However, the confidence of these buyers in office assets highlight the long-term belief in the asset class and the trophy nature of some CBD assets on the global stage.”
Ms Rader said retail had fallen away slightly compared to the prior year, after a prolonged period of lockdowns at the start of 2022.
“Retail has been another market which has seen a shift downwards in share in 2022, again the ability to obtain finance saw many buyers move up the risk curve and consider retail despite uncertainty of the future for the asset class and growing vacancies in some locations and asset types,” she said.
“In 2021, more than $21 billion changed hands representing 22 per cent of total turnover, however, this year this has been revised down to $12 billion accounting for 17.9 per cent, as buyers have been more considered and selective in their purchasing decisions.”
According to Ms Rader, the hotel and leisure sectors also had a strong year as international borders reopened and people began to travel.
“After a quiet 2021, the accommodation sector has grown in popularity, accounting for $3.2 billion in sales, up from $2.3 billion last year,” she said.
“The increased demand for travel this year is doing much to improve occupancy rates across the country as well as moving average daily room rates up across major tourism destinations and regional centres.
“Interest in these assets has rebounded and has been heavily influenced by offshore interest in large, branded assets, while the smaller motel/hotel market has seen strong private buyer interest.
“Across the leisure market, pubs again have had a strong year with over $2.2 billion changing hands in 2022, up on relatively strong 2021 results.”