ZEMCH 2015 - International Conference Proceedings | Page 770

The Sydney office market Sydney accommodates Australia ’ s biggest office market with the CBD having the biggest share , with 4,961,728 m2 ( m3property , 2015 ). Office space is categorised using the Property Council of Australia ’ s ( PCA ) office matrix . Demand for Sydney office space is high , especially in the CBD . Following the Great Financial Crisis in 2008 , the market grew slightly with vacancy diminishing from 10 % vacancy in 2011 to 9 % by 2015 ( CBRE , 2015 ). Demand for premium sustainable office buildings is high , with this Green Star rated stock commanding higher values and lower vacancy rates ( Newell et al , 2011 ). Given the Sydney office market is performing well with decreasing vacancy , good yields , increasing absorption and values , the office market supply is also increasing .
The CBD supply pipeline was 460 000 m2 in 2014 which represents 9.27 % of current total stock . A proportion , approximately 250 000m2 , is Barangaroo , the redevelopment of a container dock area immediately adjoining the CBD . It is very unusual to get such a large amount of stock coming to market in a relatively short space of time . It is due to come onto the CBD office market in 2016 and 2017 . As such , the Barangaroo supply is predicted to cause movement of existing CBD tenants in Premium and A Grade stock into the new Barangaroo stock ( CBRE , 2015 ). In turn , tenants in existing mid-grade CBD office properties are predicted to backfill the vacated premium stock ; and a replacement market develops . The result will be increased vacancies in mid and lower grade stock ( Investa , 2014 . Savills , 2015 ) and a form of relative obsolescence is predicted .
The housing market Australia ’ s 2015 housing market is very heated and some forecasting the ‘ bubble will burst ’. Overall prevailing conditions are low interest rates and low unemployment . In Melbourne , Sydney and Brisbane there has been high demand by foreign investors for apartments in the CBDs ( EC Harris , 2014 . CBRE , 2015 ). Many of whom are Chinese , seeking to invest money in markets , perceived as stable and safe . Many investment apartments purchased by Chinese buyers remain un-let as it is considered unlucky for Chinese people to occupy buildings , which have been already occupied . Having these properties un-let , further exacerbates housing affordability problems for many Australians . The superannuation system in Australia also encourages citizens to buy investment properties for a retirement income ; and this too drives up prices and excludes first time buyers .
Recently residential supply in the CBDs has been very low and stock has been restricted to office use predominantly ( JLL , 2015 ). However in the last decade , urban planners seek to reintroduce vitality and mixed use into CBDs , by allowing more residential land use . New unit with amenities such as gyms and pools , easy access to work , retail facilities and entertainment , are attractive to some buyers and investors . The migration of office tenants into newer stock and increasing vacancy rates in lower grade stock , combined with low interest rates , demand from foreign investors , wealthy immigrants , and increasing urbanisation ; housing prices escalate and this creates the economic viability to convert older , vacant or partially vacant office stock into residential land use .
Location Numerous variables influence the conversion adaptation potential of buildings ( Wilkinson et al , 2014 , Remøy and van der Voordt , 2014 ). One is the prevailing property market , described above . The location of the property is significant in terms of accessibility and public transport , access to amenities such as food and other retailing and entertainment . Access to services such as healthcare , childcare and education is also important for residential stock ( Wilkinson et al , 2015 ).
768 ZEMCH 2015 | International Conference | Bari - Lecce , Italy