Market Forecast
September 2018

Some resistance to top prime rates but growth in secondary market

 

The balance between supply and demand is always the determining factor that influences office rental rates. There is a clear pattern forming here, with healthy demand and contracting supply, this can only mean one thing – a firming of rental rates over the next two years.


The next wave of supply will be coming on-stream in 2021/22, so those companies with lease reviews coming up in 2019 should consider the length of lease they opt for. Choosing a longer 5 year lease may mean missing out on the competition for tenants in 2021/2, so perhaps a 3 year lease up to 2022, would catch the peak competition period to secure the most attractive terms.


There is already some resistance to the high end rates in the premium buildings and we expect this sector to grow only marginally around 5% over the next 12 months. In the mid to lower tier sectors though, we are expecting stronger growth as supply tightens further and the shortage of opportunities becomes more apparent.


We anticipate rates advancing around 10% over the next year in this sector and this growth is expected to continue well into 2020.

 

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