Global office markets take another turn

Repercussions of the global economic downturn on real estate markets have seen vacancy rates dramatically rise in office buildings around the world. From Amsterdam to Rio De Janeiro, London to Dubai and Beijing to Sydney office vacancies rose in tandem, according to Colliers International.

Despite positive forecasts of financial markets reigniting what has been the worst economic downturn around the world for decades, Colliers International says there have been very few positive indicators that the global office real estate downturn will make an immediate turn around.

It was a mixed reaction in the Asian Pacific market in response to the global economic downturn; the vacancy rate fell 0.4% to 15.2%, but rents also fell 5.4%. Mainland China posted a lower vacancy rate falling 4.3% to 15%, but rents fell 4%. Hong Kong’s vacancy rate jumped 5% to 16.1% and rents fell 12.4%.

Singapore is on the slow road to recovery. In the six months to June, 2003, rents fell 27.3%. Howeve, the office vacancy rate declined from 18% to 16.7% as tenants move into newer and premium office spaces to take advantage of falling rent.

Despite a resilient Australian economy moving against the global downward trend, the overall office vacancy rate rose by 0.76% to 8.62%.

In the six months to June, 2003, vacancy rates for Sydney CBD office space rose from 8.4% to 8.5%. Office markets in Melbourne were less steady than Sydney; overall, the vacancy rate in Melbourne CBD rose from 6.4% to 8.3%. Perth recovered slightly after the fourth quarter of 2002 saw its highest vacancy rate since July, 1999, from 11.6% to 11.4%.

Brisbane and Adelaide recorded a fall in CBD vacancies. Brisbane reported office vacancies falling to 5.6% from 6.8%, whilst in Adelaide office vacancies fell to 9.99% from 10.4%.

Europe and South America were worst exposed to the global market downturn, with vacancy rates the highest in years for the first half of 2003. Office real estate across European and Middle East capital cities were sluggish, recording a vacancy rise of 1.1%, whilst rents slump to 4.9%. The vacancy rate in South America rose by 1.8% and rents fell 5.4%.

Office markets in North America weren’t as exposed to the global economic downturn. Despite office space vacancies rising 0.5% and rents falling 2.6%. The North American office market is showing signs of recovery.