According to the BIS Shrapnel Adelaide Commercial Property 2014 to 2024 report, margins for office rental investors could be no more than 3 percent over a five year term. This abysmal figure is a definite sign of low demand and oversupply.
The slowed economic growth in the region and removal of large scale government projects have reeked havoc on the office space market in South Australia. Office buildings are still being built and supply is continuing to rise, meaning that vacancy rates are assured increase significantly over the next decade, well above their current 15 year high of 13.8 percent.
This is bad news for an economic sector that now won't see any sort of recovery in the near term. The negative growth in the industry is likely to spill over into the housing sector which in the 3 months leading up to November 2014 has risen by less than 1 percent.
It's not all bad news for Adelaide's economy though. With a bit of economic reform, the economic recovery we have been looking for could come in the way of foreign investment. By case of example, an American company, Ashley Furniture with an annual turnover of 4 billion, is expected to open it's first Australian store in Adelaide's suburb of Gepps Cross, just in time for the Christmas rush. It's investments like these that could very well pull Adelaide out of an economic depression.
