Office markets to feel the brunt of economic crisis

Rising unemployment and lacklustre economic growth are tipped to batter Australia’s commercial property markets in 2009.

While the commercial sector was expected to surge before the credit crunch hit, mounting job losses are expected to create a rising glut of available space – especially in Sydney because of its exposure to the finance sector.

Morgan Stanley property analyst Lou Pirenc told The Australian Financial Review he expected a severe decline in demand in the sector over the next 12 to 18 months.

“We have office vacancy rates in all markets going above 10%, maybe to 12%,” he said.