Where Are the Commercial Opportunities for Architects?

Thursday, November 5th, 2015
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Around Australia, much has been said about the opportunities for architects to gain from the surge in multi-residential construction within eastern states.

Indeed, with the number of dwelling units approved for non-detached housing in the first eight months of this year being up by almost two thirds, the apartment building boom is fuelling a significant recovery in business conditions for architecture and design practices and demand for architecture professionals.

In the commercial building sector, however, the pace at which new building work is coming in appears to have slowed overall after two years of modest recovery. At $21.195 billion, the overall dollar value of new building work approved for construction within the non-residential building sector in Australia over the first eight months of this year was down by 14.42 per cent compared with the same period last year as work on office, retail, healthcare and even the previously booming aged retirement sector dropping back.


Going forward, at an aggregate level, several factors are expected to lead into further subdued conditions. With business confidence remaining neutral at best and the RBA expecting slightly below trend growth, general economic conditions would not appear to imply an enormous amount of new demand for office, retail or industrial space. In commercial property specifically, investment outlook conditions are not overly conducive to any form of massive wave of new development: participants in National Australia Bank’s latest Quarterly Australian Commercial Property Survey see the market across most sectors as being oversupplied over one, three and five-year periods. While the country remains awash with foreign capital seeking investment, making new developments stack up on value is becoming more difficult.

Nevertheless, some green shoots are starting to emerge. As the tourism sector bounces back, the need to refurbish existing hotels and accommodation facilities and build new ones, especially on east coast markets, is expected underpin a five-year boom at least in new hotel building. The industrial sector is seeing a slight rise in the number of new projects coming in, while the pace at which new work is coming in in the building of education facilities has finally stabilised. Demand for religion-related buildings, too, are growing, though the size of this sector is tiny in proportion to the overall commercial building sector.

In line with the general drop in new building work coming in, meanwhile, most states expect an overall drop in commercial building activity throughout 2015/16.

architecture prospects

Where the best opportunities lie

There are a couple of areas of opportunity despite the general subdued nature of the commercial building market.

Thanks largely to a booming tourism sector, hotels have emerged as the next area of commercial building boom. There is a need to refurbish existing accommodations and build new accommodations in order to cater for anticipated strength in tourism demand, according to Australian Construction Industry Forum. Not surprisingly, the Gold Coast and Tropical North Queensland are the centre of action amid a rippling pipeline of projects including the $8 billion Acquis Great Barrier Reef Resort in Cairns.

Activity is also set to grow in Melbourne and Sydney, where average room occupancy rates of 90 per cent are in site and work on developments like 80 Collins Street and Freshwater Place are expected to see the dollar value of work done almost triple in Melbourne. The Brisbane and Perth markets are still expected to grow despite slowing occupancy in those markets.

Outside of that, significant growth sectors are hard to find but there are a few. In Victoria, office and retail building activity are expected to grow by 6.9 per cent and 13.9 per cent respectively in 2015/16, ACIF says. That market is expected to stabilise thereafter on the back of a good range of commercial and mixed use projects including the Melbourne Quarter Batmans Hill project at Docklands and the 48-storey Telstra headquarters building and the mixed use Olderfleet building in Melbourne.

In South Australia, the value of work done on retail facilities is expected to grow by 16 per cent, while that on educational facilities is expected to bounce back after falling by around 20 per cent last year.

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