A lack of available stock and attractive yields are driving office sales in fringe office markets.
Research from Savills Australia found the dollar value of sales in Brisbane and Melbourne fringe office markets and Sydney's north shore were up $769 million over 12 months.
Suburban offices at 13 and15 Compark Circuit in Mulgrave in the Compark Business Park.Credit: Urban Angles
The $2.12 billion spent on office property in the north shore was up 25 per cent on the long-term average of $1.7 billion, Melbourne's $1.39 billion was up 31 per cent and Brisbane's $846 million up 22 per cent, Savills said.
Yields on average were 6.59 per cent across the three fringe markets, compared with 5.96 per cent for CBD markets. The largest yield difference was between Melbourne CBD (5.75 per cent) and surrounding fringes (6.63 per cent).
Foreign investors bought nearly half of all assets, Savills found.
Commercial sales director Clinton Baxter said tightening vacancy was driving rental growth in CBD markets.
That meant less choice and greater tenancy costs, including diminishing incentives, resulting in fringe markets becoming more attractive," he said.
Vendors seeking to capitalise on the market have listed two modern offices in the Compark Business Park in Mulgrave with expectations above $20 million.
The two-level office buildings leased to US-based fire and security provider Tyco Australia and multinational PZ Cussons for net income of $1.611 million will be marketed by Dawkins Occhiuto.