Victoria, New South Wales See Office Demand Spike in Regional Areas

AUSTRALIA – Office properties in regional areas outside of Melbourne and Sydney have seen a sharp increase in demand, reported Commercial Real Estate on Friday (27 November).

This is especially true for Victoria’s Ballarat, Bendigo, and Geelong, as well as NSW’s Central Coast, Newcastle, and Wollongong. In comparison, the COVID-19 pandemic had not caused an exodus of businesses of a similar extent in other major cities.

“We’ve seen a big resurgence of demand for office space in Wollongong,” said St Trinity Property Group’s Managing Director Nicholas El-Khoury, who revealed that they have been approached by many companies looking for more office space outside of major cities.

Notably, St Trinity Property Group has been renting out the new Grade A commercial premises at its mixed-use project Crown Wollongong.

Key factors behind the growing interest in Wollongong’s office market is that the area represents an appealing alternative to businesses considering to reduce cost and retain talents, particularly those who want to escape the city and have a change of scenery.

Apart from its diverse and dynamic local economy, Wollongong has competitive rents and good leasing opportunities compared to Sydney, on top of the diverse and dynamic local economy, he noted.

For instance, the cost of setting up an office space or retail shop is 30 percent less expensive than those in major cities. Consequently, there’s a steady influx of businesses to such regional hubs.

Among those who have decided to relocate is Indesco, a consultancy specialising in landscaping and civil engineering that has leased a new office at St Trinity’s Crown Street development.

“We know a lot of people are looking for a coastal lifestyle change,” said Indesco’s National Head Structural Engineer Aaron Hazelton.

“As we’re in property construction and design, we can see the whole market is growing on the coast. We think this is a trend that’ll continue” as more people are expected to leave cities like Sydney as they want to do away with traffic and long commuting time.

While there’s still no data on the exact number of companies shifting out of major cities like Melbourne and Sydney to relocate to regional areas, as well as on the volume of office space leased or sold in such locations, an expert pointed out that word on the market is that businesses are following people who want a lifestyle change outside of the cities.

“I think there’s clearly evidence of a rise in residential demand out of the cities and in regional lifestyle destinations. I wish we had more information on the commercial side. But I hear anecdotally from some of our colleagues in some of our regional cities that interest has increased,” said Knight Frank’s Commercial Head Ben Burston.

Still, LJ Hooker’s Commercial Research Head Mathew Tiller noted that commercial property agencies are seeing more enquiries and demand from small and large companies. This is because people are moving their businesses out of the cities, as they can now work remotely, while others are establishing their firms in cheaper regional areas.

“There’s also a growing population in the regional areas. And like residential, it’s much more affordable to be outside the major cities,” said Tiller, who is seeing the largest growth in Geelong, Central Coast, Central Coast, Newcastle, and Wollongong.