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News release


Canberra is the most affordable CBD location for a government department to locate

Jones Lang LaSalle estimates that the overall occupancy cost for a government department in Canberra is approximately 50% of the Sydney CBD

CANBERRA, 29 MAY 2013 – Based on average rental rates for prime-grade stock, Canberra is the most cost-effective CBD location for government departments to be located.

At Jones Lang LaSalle’s industry event in Canberra today, Jones Lang LaSalle constructed the hypothetical occupancy cost for a government department with 4,000 people and a car parking ratio of one bay per 300 sqm of leased space.
The volume of space occupied was calculated using the Federal Government’s proposed work point per person ratio of 1:14 sqm.
ACT Managing Director at Jones Lang LaSalle, Andrew Balzanelli said, “Our analysis clearly demonstrates that Canberra is the most affordable CBD location in Australia to locate government departments.
“To locate a government department of 4000 employees based on a workspace ratio of 1 person to 14 sqm, the total occupancy costs for Sydney came out at $36.4 million compared to $19.2 million per annum occupancy cost for Canberra.
“Our Research shows that prime average gross effective rents have increased in Canberra over the past 10 years by 20.6%, compared to Brisbane at 90% and Perth at a massive 192%. Sydney and Melbourne have been more in line with Canberra, at 19.4% and 16.3% respectively.
“But Canberra rents remain the most affordable, currently at an average prime gross effective rent of $332.82, compared to Sydney average prime gross effective rent rents at $621.10, with Perth prime gross effective rent rents the highest at $794.53. This doesn’t support any move of government departments out of Canberra based on these figures,” said Mr Balzanelli.
Figure 1: Average Prime Gross Effective Rent, Q1 2013

Prime Gross
Effective Rent
Q1 2013
Canberra $332.82
Sydney $621.10
Melbourne $399.06
Brisbane $486.08
Perth $794.53
Jones Lang LaSalle has a 35-year net absorption time series for the Canberra market.
Mr Balzanelli said, “Our research shows that under a Labor-led or Liberal-led
Government over the past 35 years, the average net absorption figure has been virtually the same (circa 33,000 sqm).
“It is only when we remove the anomaly of 2007 – at the end of the Howard era – that we see a significant difference in net absorption under a Liberal-led Government,” said Mr Balzanelli.
Figure 2: Canberra Office Market – Net Absorption

The research event in Canberra was also given a report on the commercial real estate outlook for 2013.
A Jones Lang LaSalle report titled, ‘Strategies for the new ‘normal’ was presented by Australasian Head of Research and Consulting, Dr David Rees, who outlined permanent and temporary changes to commercial property markets since the GFC.
The paper argues that in many respects, direct real estate is tracking close to long-term benchmarks and close to being back to the ‘old normal’: but the same cannot be said for capital markets.  It identifies a range of changes – some of them permanent or structural, others short-term or cyclical, which have been initiated by the Global Financial Crisis and outlines what these changes mean for real estate owners, investors and tenants.
Dr Rees said, “Commentary since 2007 had often implied that ‘normal’ conditions will eventually return to real estate and financial markets. But five years on, this prospect is less convincing.
“Across many metrics – vacancy, yields, rents and capital values – commercial real estate markets have returned to something close to ‘normal’ market conditions. But in other respects, such as the volume of cross-border capital flows and the gap between property and bond yields, conditions are very different from pre-GFC conditions. The question is whether these trends are part of the post-GFC adjustment process, or are they here to stay?
“The commercial real estate landscape has changed dramatically since the onset of the Global Financial Crisis (GFC) in late-2007. While the past five years have been challenging for real estate, as for other sectors of the economy, not all the changes have been adverse. For example, the GFC has stimulated a global portfolio shift towards real estate as an asset class,” concluded Dr Rees.