Small and micro businesses are being driven from the CBD’s of at least three major Australian cities, due to the tight commercial market and a lack of affordability for premium office space.
According to Servcorp executive director Taine Moufarrige, small and micro businesses looking for a well positioned office in Perth, Sydney and Brisbane have been the worst hit by the rise in demand for commercial space. These three cities have been recognised by the Property Council of Australia’s Office Market Forecasts as having the highest commercial rents in the country.
Businesses in Perth and Sydney will soon be looking to pay more than $830 per square metre, with Brisbane businesses looking at almost $700 per square metre.
“Vacancy rates are getting lower and rents are going up. There will be very limited affordable, well located space available for small businesses, even in the fringe areas of the CBD,” Moufarrige said.
Commercial vacancy rates are as low as 0.5 percent in the western Sydney suburb of Homebush, considered a growth area for Sydney, and 4.5 percent for West Perth.
According to the forecast, the limited amount of construction room to create more commercial space is exacerbating the issue in these high demand areas. Brisbane in particular has focused on repair and reconstruction in the CBD following the January floods, without adding capacity.
“It will be more than a few years before the supply of premium space will even begin to meet demand,” Moufarrige said.
Moufarrige believes the issue is likely to be a medium-term one, and is leading to increased demand for Servcorp’s serviced offices as well as virtual offices.
“Serviced and virtual office space has become one of the few affordable alternatives for small businesses looking to take advantage of a prime CBD location without having the associated overheads normally required with commercial rental. It also gives them added flexibility which is a big benefit in a tight market where conditions change in an instant,” he said.