The Australian newspaper has today published an article claiming that office vacancy rates have ballooned across Australia’s capital cities, with one tenth of office buildings now lying vacant – a figure worse than the GFC and the highest rate of vacancy since 1999, according to real estate firm Jones Lang LaSalle (JLL):
JLL found that five of the six CBD office markets are recording double-digit vacancy rates, with the amount of empty office space the highest in Brisbane, where vacancy rates are 14.3 per cent.
In Sydney, the vacancy rate is 10.2 per cent, while in Melbourne it sits at 10 per cent. In Adelaide, 12.7 per cent of office space is empty while in Canberra the figure is 11.6 per cent. Only Perth has a vacancy rate that is below 10 per cent, with 7.9 per cent of office space devoid of workers.
“There is no precedent for what is occurring in Australian office markets,” said Andrew Ballantyne, JLL’s head of capital market research. “Investment activity remains robust, while the 2012-13 financial year can be best described as an annus horribilis for the physical markets (leasing markets).”
Mr Ballantyne said he expected office leasing markets to remain tough over the rest of the year and possibly into early next year after recent surveys showed business sentiment and job ads were weak and below trend.
There are indications of expanding pressure on business across a number of fronts. Earlier this week, NAB released its business confidence survey, which showed business conditions plunging to their lowest level since May 2009, with weakness evident across the various sub-components. And yesterday, Business Day’s Adele Ferguson published an article arguing pointing to declinging insolvency returns:
When creditors are happy to accept an average of less than three cents in the dollar on debts owed, it is a portent of dark days.
When half the statutory demands served on small to medium-sized businesses result in no payment, it isn’t too far a stretch to think those dark days are closing in.
…It explains a briefing paper to Victorian Treasurer Michael O’Brien last week that is understood to show that the downturn is widespread, with the billable hours of the state’s top law firms and accountancy firms down 25 per cent year on year.
Debt collection agency Prushka has been monitoring the trends for the past 12 months and likens the rapid deterioration in debt collection to the ”canary in the coalmine”.
…of all the statutory demands served on behalf of Prushka over the past 12 months, 47 per cent across the country resulted in no payment. It says the amount recovered equated to 2.9 per cent of the total amount claimed. The reason? ”Creditors were prepared to accept very substantial reductions rather than face the cost and risk of proceeding to a petition to wind-up the respective company,” according to the agency.
To put it into perspective, a year ago only 20 per cent of statutory demands resulted in no payment and an average of 20 per cent of the total debt was recovered. This indicates a significant deterioration in debt collection and confidence…
Let’s hope the green shoots in housing construction and the non-mining dollar-exposed sectors kicks into full bloom soon.
