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Rent gap widens – possible reason for concern as we near previous cycle peak

  • ​Bolstered by the growth of media, technology and the creative industry, Westside asking rents continue to rise, especially in the class A sector. Conversely, the CBD has seen class A asking rents remain steady, increasing only minimally in recent years.
  • Westside rent growth can be attributed to its dynamic tenant base. Media, technology and creative tenants who gravitate to the Westside have been in expansion mode in recent years, and they appear less price conscious than the more stable financial, insurance and legal services companies found in the CBD. While rental rate growth is not as pronounced in the CBD, the stability in its tenant base may insulate the micro market more from economic turns. 
  • The volatility of the Westside's dynamic tenant base could prove a potential concern. The rent gap between the two markets currently stands at 37.5 percent, quickly approaching the 38.9 percent peak, hit in 2008, which coincided with the start of the recession and downturn in the market. ​

Source: JLL Research​

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