A rise in overseas students has fuelled leasing activity in Melbourne’s B-grade office market, prompting a mild recovery in the once decimated vocational education training sector.
Federal government figures show that last year 302,976 international students started study in Australia, a jump of 9.3 per cent over 2012.
The shift is the first sign of an upward trend since 2009, when migration law changes resulted in a sharp fall in student numbers, exacerbated by the high Australian dollar and safety fears after attacks on foreign scholars.
Architecture practice Arina Hayball’s education specialist Geoff Hanmer said the vocational education and training sector was recovering after a ”near total collapse”.
”The indicators are that the numbers are up and have been for a while … [but] there’s not been a particularly strong recovery,” he said.
Despite that educational institutions have added about 40,000 square metres of floor space in the CBD since 2010, Savills Australia research suggests.
”This is a 20 per cent increase in floor space in a relatively short time; a remarkable figure at a time when net absorption across the market generally has been negligible,” said Savills’ head of research Tony Crabb.
Recent leases include the Australian Institute of Music, which took 3000 square metres in 120 King Street, the Complex Training Academy (2000 sq m at 400 Queen Street), the Australian Institute of Management (1250 sq m at 380 La Trobe Street), and the Australian Institute for Teaching and School Leadership (1200 sq m at 440 Collins Street), said Mathew Kent who heads up Savills specialist education leasing division.
Mr Kent attributed the growing interest to a streamlining of the student visa application process and introduction of post-study work visas for higher education graduates.
”Over the last 12 months we’ve seen a steady increase in inquiry from educators, and not simply from existing CBD businesses but also from those currently in suburban locations who are looking to take advantage of the CBD location and current landlord incentives,” he said. ”Much of that increase is translating into new leasing agreements.”
Education providers occupy 220,000 square metres in the CBD.
Other deals in the past 12 months include:
Melbourne IT: 2500 sq m, 469 La Trobe Street.
Gurkhas Institute: 700 sq m, 341-357 Bourke Street (London Store).
Harward International College: 600 sq m, 422 Little Collins Street.
Max Therapy School: 575 sq m, 310 King Street.
Lonsdale Institute: 500 sq m, 277 Flinders Lane.
Victorian College of Fitness Professionals: 500 sq m, 310 King Street.