Australia’s main capital cities are experiencing unprecedented population growth and Melbourne’s outer suburbs are the fastest growing regions in Australia. This growth is set to drive Australia’s real estate markets over the coming years. While the implications for residential real estate are already becoming apparent, there are emerging positive trends for the commercial real estate markets in these regions and Melbourne’s south-east is.
On the residential side of the coin, job opportunities, available and affordable real estate and improving transport infrastructure, including public transport, are major drivers. However, on the commercial side of the coin the factors are a little more complex.
The first signs relate to Melbourne’s city fringe suburbs such as Richmond and Cremorne, where commercial rents have nearly doubled in five years.
Drivers for the shift from CBD to CBD fringe and now into more suburban locations is being driven by a diverse range of factors, including rapid population growth which is leading to increased business activity, combined with a desire by employers to improve employee work-life balance. This is manifest in shorter employee commutes and access to increasingly sophisticated staff amenity in suburban locations, such as shopping and food.
Additionally, there is a widening gap in rentals as the CBD office occupation costs increase. Another major driver is improved information technology infrastructure.
With its rapid population growth from both overseas and internal migration, buoyed by Australia’s strongest state economy and a massive state government infrastructure development agenda, Melbourne is expected to have the largest workforce in Australia by the middle of the century.
The reality is that the CBD, even with new office developments progressing, has limited expansion growth and remains expensive. In fact, Australia is estimated to require an additional 13 million square metres of office space by 2050 and that won’t be met from CBD office developments. Australia’s capital city office and commercial property markets simply have no choice but to look to suburban expansion
For many businesses it simply makes sense to seriously explore enterprise expansion in places where commercial property is affordable, there is a large, increasingly well trained population that is more than happy to seek employment opportunities with a reduced commute time and improved transport infrastructure means that moving people and goods is no longer the challenge it used to be.