Colleges are one such sector that is becoming a big force in
the city fringe commercial property market, having leased a total of more than
15,000 square metres of office space over the past year.
Paying about $350 to $400 a square metre, the colleges are
pushing up rents for other big space users, such as call centres.
Many of the colleges are English-language schools catering
to up to 1000 overseas students in each. They prefer locations around Surry
Hills and Ultimo, suburbs close to public transport routes and cheaper
accommodation.
Knight Frank’s NSW research manager, Selina Poyner, says
that in Sydney
lack of space is proving to be an issue for education users. That is on top of
the reluctance of some owners to take on educational tenants because of the
disruption they may cause other tenants.
“Therefore colleges are looking for full building
options on long leases in the city or city fringe locations with good transport
and access to the city,” Ms Poyner said.
The higher rents are also being fuelled by the lack of
supply of general office space in the CBD.
According to Colliers International’s latest CBD report,
Sydney CBD’s overall vacancy rate hit a 17-year low of 3.7 per cent in January.
This is the lowest vacancy in Sydney
since the 3.6 per cent recorded in 1990.
The state director of research for Colliers, Felice Spark,
said the near-record low was helped by a total stock reduction of 77,755 sqm to
4,634,463 qm, largely driven by 111,958 sqm of stock withdrawals in the last
half of last year.
Ms Spark said the big fall in vacancy levels – vacancies have
fallen 1.9 per cent in the past six months – has had a predictable impact on
rents, which have risen 16 per cent.
DB Property recently leased 414 Elizabeth Street,
Surry Hills (3200 sqm) to The Carrick Institute of Education for $350 a square
metre.
The principal of DB Property, David Brown, said there was no
doubt colleges were playing a big part in increasing prices and rental rates in
the city fringe, with the average areas taken by them at 2000 square metres.
“Many of the buildings they are buying or leasing have
not been refurbished for several years and are providing a very solid base of
returns for owners, as well as the areas’ local cafes and other businesses as
they are servicing hundreds of students.” Mr Brown said.
THE character of the CBD is changing – a variety of new
industries are entering the district once dominated by accounting, banking and
finance firms.
Colleges are one such sector that is becoming a big force in
the city fringe commercial property market, having leased a total of more than
15,000 square metres of office space over the past year.
Paying about $350 to $400 a square metre, the colleges are
pushing up rents for other big space users, such as call centres.
Many of the colleges are English-language schools catering
to up to 1000 overseas students in each. They prefer locations around Surry
Hills and Ultimo, suburbs close to public transport routes and cheaper
accommodation.
Knight Frank’s NSW research manager, Selina Poyner, says
that in Sydney
lack of space is proving to be an issue for education users. That is on top of
the reluctance of some owners to take on educational tenants because of the
disruption they may cause other tenants.
“Therefore colleges are looking for full building
options on long leases in the city or city fringe locations with good transport
and access to the city,” Ms Poyner said.
The higher rents are also being fuelled by the lack of
supply of general office space in the CBD.
According to Colliers International’s latest CBD report,
Sydney CBD’s overall vacancy rate hit a 17-year low of 3.7 per cent in January.
This is the lowest vacancy in Sydney
since the 3.6 per cent recorded in 1990.
The state director of research for Colliers, Felice Spark,
said the near-record low was helped by a total stock reduction of 77,755 sqm to
4,634,463 qm, largely driven by 111,958 sqm of stock withdrawals in the last
half of last year.
Ms Spark said the big fall in vacancy levels – vacancies have
fallen 1.9 per cent in the past six months – has had a predictable impact on
rents, which have risen 16 per cent.
DB Property recently leased 414 Elizabeth Street,
Surry Hills (3200 sqm) to The Carrick Institute of Education for $350 a square
metre.
The principal of DB Property, David Brown, said there was no
doubt colleges were playing a big part in increasing prices and rental rates in
the city fringe, with the average areas taken by them at 2000 square metres.
“Many of the buildings they are buying or leasing have
not been refurbished for several years and are providing a very solid base of
returns for owners, as well as the areas’ local cafes and other businesses as
they are servicing hundreds of students.” Mr Brown said.
“This demand is having a flow-on effect to the
residential sector as more students are seeking accommodation close to the
colleges, and we have seen strong demand in Surry Hills, Redfern and Ultimo for
student accommodation.”
Another obstacle for college owners was that not all commercial
buildings could accommodate them because of stringent council requirements
relating to health, ventilation, zoning and access.
Other recent deals included Group Colleges Australia,
which leased one of the former TNT towers in Redfern.
The group, the private parent of such education operations
as the Australian Institute for Workplace Learning and St James College (for
senior high school students), is one of a number of rapidly expanding education
operators that have become key tenants in the city and its surrounds.
Group Colleges will open a new, 4500 sqm campus in Redfern,
in Tower 2 at Lawson Street,
and will spend more than $1 million on the fit-out.
Cameron Algie, of Tim Green Commercial, who advised in the
Group Colleges deal, said colleges and universities were finding space
increasingly difficult to source because of the tightening office market.
“Rents of colleges are moving faster than office
rents,” Mr Algie said.
In Melbourne
the story is similar. La Trobe University is due to open its city campus in the
former Argus building in Elizabeth Street in
2009; Victoria University
has a large city campus; and Monash
University has a city
office and conference centre.
Source:
http://business.smh.com.au/colleges-soak-up-space-in-city-and-fringe-areas/20080321-20×0.html