Barometer shows ease in Sydney office demand

Demand for office space in Sydney has eased but is still better than the same time last year, a new report reveals.

The DEXUS office demand barometer eased slightly in the March quarter but remains in positive territory.

DEXUS General Manager, Research, Peter Studley, says business confidence declined thanks to a fall in the share market and mixed news on the global economy, particularly China.

“However, the barometer was supported by an increase in in the ANZ job advertisement series of more than 6%, which is a promising sign for future office demand,” Studley says.

“While conditions for office demand in the Sydney CBD have improved, they remain somewhat challenging. A sustained lift in business confidence will be necessary to ensure demand for office space improves in 2014.”

DEXUS is one of Australia’s biggest landlords, with $17.3 billion of assets under its management and an office portfolio of 1.4 million sqm across Sydney, Melbourne, Brisbane and Perth.

The barometer report indicates reasons for optimism in the Sydney office market, including firming business conditions and an economy that’s responding to easing monetary policy.

“Consumers are responding to low interest rate levels with retail turnover continuing to grow and the housing market strengthening. Interest rates are expected to remain low over the short to medium term, encouraging business expansion,” the report says.

“While cost cutting by governments and a focus on productivity in the corporate sector are likely to impact jobs growth in some sectors, there are other sectors that will benefit.

“Outsourcing will lead to growth in business services and the IT sector will benefit from greater adoption of technology from businesses seeking to drive efficiencies.”