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ACT Office Market Vacancy lowest in seven years

 ACT Executive Director, Adina Cirson has said the Property Council of Australia’s latest Office Market Report has recorded the lowest vacancy rate since 2012, with a further reduction recorded in the last six months as a result of positive demand in the Canberra commercial leasing sector.

“Over the last six months to January 2020, Canberra’s overall vacancy rate decreased to 10.3 per cent from 11.1 per cent – down from 13.3 per cent recorded two years ago, highlighting a continued tightening in the market,” Ms Cirson said.

“Demand for office space is second behind Perth when compared with all other Australian capital cities, with the hottest properties being prime office product, highlighting the private sector demand for office environments that assist in staff retention by creating attractive workplaces.   

“A Grade vacancy has remained fairly steady at 6.9 percent, but B Grade fell significantly - dropping from 14.1 per cent to 12.3 percent (the biggest downward shift since July 2013), with the market also reporting increased inquiries for ‘suite product’. C and D Grade stock are at their lowest levels since 2007 and 2010 respectively.

“The vacancy rate in Civic however has remained reasonably high at 12 percent, bucked by a further reduction in vacancy in the non civic market down to 9.6 percent.  This is in line with a national trend for non CBD markets recording vacancy decreases.  vacancy in areas like Barton is as low as 6.2 percent.

“We have also seen a shrinking market - really since January 2015, so withdrawal of stock also clearly helps our vacancy rates, meaning the market is primed to realise adaptive re-use opportunities in the C & D Grade stock, with a positive trend of refurbished stock entering the market,” Ms Cirson said.

“Further to this, and with over 50 per cent of the ACT office market tenanted by the Commonwealth, the market is keenly watching the impact of the Prime Minister’s most wide reaching Machinery of Government changes in recent years, with the change up and running from last weekend - placing the commonwealth tenancies on the market watch list this year,” Ms Cirson concluded.

Media contact:  Adina Cirson |M 0429 579 972|E acirson@propertycouncil.com.au 

 

Office Market Report January 2020

Analysis – Canberra market

Headline comments:

  • Canberra recorded a vacancy decrease over the period
  • This decrease was due to positive demand
  • The positive demand was concentrated in the A and C Grade segments
  • There is some space in the pipeline over the short to medium term

 

Vacancy analysis:

  • Vacancy decreased from 11.1 percent to 10.3 percent over the six months to January 2020
  • This was due to 28,202sqm of net absorption
  • 42,281sqm of space was added over the period while 31,854sqm was withdrawn
    • A Grade – Vacancy remained at 6.9 percent
    • B Grade – Vacancy decreased from 14.1 percent to 12.3 percent due to 25,523sqm of withdrawals
    • C Grade – Vacancy decreased from 17.9 percent to 16.1 percent due to 8,482sqm of net absorption and 5,341sqm of withdrawals
    • D Grade – Vacancy marginally decreased from 14.9 percent to 14.7 percent
  • Civic’s vacancy rate remained at 12.0 percent
  • Vacancy in the Non Civic market decreased from 10.8 percent to 9.6 percent due to 30,354sqm of withdrawals and 11,925sqm of net absorption

 

Future supply:

  • A total of 79,216sqm of new space is due to enter the market in 2020
  • This will be followed by 23,000sqm in 2021
  • 21,000sqm of space is due to come online from 2022 onwards
  • 124,000sqm of space is mooted

 

Key market indicators, Canberra (aggregate)

Grade

Vacancy,

Jan 20 (%)

Vacancy,

Jul 19 (%)

Net absorption, 6 months to

Jan 20 (sqm)

A

6.9

6.9

24,388

B

12.3

14.1

-3,979

C

16.1

17.9

8,482

D

14.7

14.9

-689

Total

10.3

11.1

28,202