Managing costs will take on new importance as businesses adjust and recover from the deep economic impact of COVID-19. Commercial property owners and managers will be no exception as they map their way through the aftermath of the months-long disruption to normal business.
According to the Property Council’s annual operating benchmark results for the year ending June 2020, Sydney’s metropolitan markets are competitive destinations for office investment when measured against operating expenses such as local government rates.
Operating expenses can be adjusted to suit the changing needs of an office portfolio, however statutory costs such as local government rates are almost non-negotiable. After land tax, rates contribute a significant proportion of operating costs for office buildings.
The Sydney metropolitan market result reveal council rates amount to just over 6% of total operating costs. This compares to council rates in the Perth CBD which amount to over 18% of the total operating costs making Perth CBD least attractive to investors compared to other major CBD markets.
Source: Property Council of Australia
The overall total operating costs for the Sydney metropolitan markets is $113.19/sqm is lower than the Sydney CBD market ($169.97/sqm) and Brisbane ($166.91/sqm).
With lower council rates and overall operating costs, the Sydney metropolitan markets is attractive to investors in a time where capital is restricted and expenses are closely monitored.