Is there a relationship between the boom in Australian property prices, the commercial property sector, foreign investment and sustainability, and if so, how does this boom drive innovation in today’s commercial real estate market?  

Unbeknown to many, the commercial design and property sectors reflect one another more closely than perhaps many other industries.

In practical terms, this means that expansion in property building bolsters growth in the need for design services.

The two disparate disciplines are almost mirror images of each other in terms of how they shape each another’s fortunes.

Like with much in the world of modern-day economic, it’s all about an interconnected ecosystem culminating in cause and effect, whereby the effects of a strong property market cause a reaction in the design industry.

Put another way, in a thriving property market, there is more choice for designers for work, while at the same time, a vibrant design industry bolsters growth in the property sector by enticing new investors to add more value to otherwise run-of-the-mill or old properties, which in turn creates the perfect incubator for even further growth.

And as with commercial design, growth in commercial property is driven largely by investment from third parties.

At the end of 2017, CBRE reported that foreign investment now accounts for a third of commercial property transactions across the country, making Australia a prime destination for global cross border capital.

It is also of little surprise that Asia has emerged as a key source of investment in Australia’s property sector, with the region accounting for an estimated $2 billion of capital injection in 2017 alone.

As for the commercial property market, this is stronger and broader than ever, which also has other, perhaps less favourable consequences.

For example, as rent in premium inner city locations rises and availability drops dramatically, occupiers look for other locations beyond CBD or surrounding areas. This factor, coupled with enhanced road and transport infrastructure, means that investment in property outside the central city is now an increasingly viable prospect.

But location is not the only aspect in which Australian commercial property is diversifying. Recent years have also seen marked growth in properties that would otherwise be withdrawn from the market through adaptive reuse and refurbishment.

This is particularly relevant in markets such as Sydney and Brisbane, where 40 000m2 and 34 000m2 respectively of commercial stock were withdrawn over the past 12 months.

While not necessarily a huge influence on growth – scarcity does, after all, effect demand – meaning the property industry must be prepared to deal with the increased level of competition that reduced stock ultimately brings.

Environmental certification and sustainability credentials too are increasingly important considerations for occupants selecting office and other commercial space.

In Australia, there are currently over 100 offices with a 6-star or above Green Star rating, a figure that is growing with each passing year, meaning that in order to remain competitive and attract high quality and hopefully long-term tenants, property professionals need to continue to leverage – and invest in – green and sustainable design options.

The Australian market for commercial design is booming. Now is the time to get in front. For more vital information that you need to help you think creatively about property and get ahead of the curve, register for FRONT today.

Coming to Sydney’s Carriageworks this 9 – 10 August, the inaugural FRONT event explores all these factors and more. Hear from the industry’s best and brightest as they take a closer look at the factors driving the formidable property market – and how best to sustain this.