Demand for high-quality office spaces has led to an increase in leasing deals for prime-grade offices, according to Colliers.
The rebound has also led to average Australian face rental growth of 5.3 per cent across all grades.
Head of Office Capital Markets at Colliers, Adam Woodward, said the increase in office leasing values will benefit owners that prioritise quality office spaces.
“This means demand for new and enhanced workplace environments will see average capital values for Premium and A-Grade office assets in CBDs decline by around 5 per cent and 12 per cent respectively, while values of B Grade assets may fall by as much as 20 per cent by March 2024,” Mr Woodward said.
The market is now expected to recover post-March 2024, but the values of prime assets will remain significantly stronger.
Colliers also found that despite a 10 per cent drop in capital values, compared to a 25 per cent drop during the GFC, office leasing and capital values are not currently aligned.
This means that demand for high-quality office spaces will continue to support capital values, which will help the market recover in 2024.