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CBD office yields to soften but markets will remain strong

Staff Reporter 1 minute read

The credit squeeze may result in some easing of investment yields in domestic CBD office markets but is unlikely to result in an oversupply of investment stock, according to research by Colliers International.

“Given that we are coming off a very tight market it is unlikely we will see an oversupply but rather a more dynamic secondary market providing opportunities for cashed up buyers, such as wholesale funds, super funds, high net worth individuals and investor/developers, to add value,” Collier’s director of commercial research (NSW) Felice Spark said.

“This will see some easing of yields but it is more likely to be in secondary grades as low vacancies and strong rental growth continue to attract a high level of investor interest in and competition for premium stock,” she said.

Collier’s research also revealed that vacancy rates are continuing to remain at record lows. With new supply likely to be delayed due to the rising cost of debt and sharemarket volatility pushing construction dates for new projects back, CBD markets are likely to remain tight.

Published: 07-03-08

CBD office yields to soften but markets will remain strong
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