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ACT Office Market Vacancy steady despite COVID-19: Increased demand keeps vacancy lowest in eight years

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

Office vacancies are calculated on whether a lease is in place for office space, not whether the tenant’s employees are occupying the space or working from home.

“Over the last six months to July 2020, Canberra’s overall vacancy rate slightly decreased from 10.3 per cent to 10.1 per cent – down from 13.3 per cent recorded in January 2018, highlighting a continued tightening in the market,” Ms Cirson said.

“East Melbourne and Canberra were the only markets to record a decrease in vacancy over the six months to July 2020.  This is good news for the ACT – after the last six months we have experienced as a nation – and it is pleasing that the Canberra market sits just above the Australian office vacancy rate.

Australian office vacancy increased from 8.3 percent to 9.5 percent over the six months to July 2020 with flat – not falling – tenant demand, according to the Property Council of Australia’s Office Market Report, but still below historic averages despite COVID-19.

Key markets of Sydney and Melbourne CBD had vacancies of 5.6 percent and 5.8 percent respectively, while vacancies in other capital city markets are sitting at Canberra at 10.1 percent, Brisbane at 12.9 percent, Adelaide at 14.2 percent and Perth at 18.4 percent.

“A & B Grade vacancy has remained steady at 6.9 percent, 12.1 percent respectively, C and D Grade stock both declining and remain at their lowest levels since 2017 and 2010 respectively, Ms Cirson said.

“The vacancy rate in Civic however rose slightly, bucked by a further reduction in vacancy in the non-Civic market down to 9.2 percent due to demand. 

“And whilst we will see a dip in the supply of office space over next 2 years, 2022 will see an additional 79,000sqm of space is due to come online which is a good sign of of the confidence of investors in the Canberra market.

“With over 50 per cent of the ACT office market tenanted by the Commonwealth, these long term tenancies are no doubt helping our vacancy rates remain steady, providing a safe and secure employment and tenant base for Canberra, but it is great to also see the demand in the rest of the market, despite the economic challenges we are all facing.” Ms Cirson concluded.

13 August 2020

Please see snapshot attached.

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

 

 

Office Market Report July 2020

Analysis – Canberra market

Headline comments:

  • Canberra vacancy decreased over the period
  • This was due to positive net absorption
  • A Grade was the only segment to record single digit vacancy
  • C Grade was the only grade to record negative demand
  • There is some space in the pipeline over the short to medium term

 

Vacancy analysis:

  • Vacancy decreased from 10.3 percent to 10.1 percent over the six months to July 2020
  • 17,300sqm was added while 2,666sqm was withdrawn
  • Net absorption over the period was 17,055sqm
    • A Grade – Vacancy remained at 6.9 percent
    • B Grade – Vacancy decreased from 12.3 percent to 12.1 percent due to 672sqm of net absorption
    • C Grade – Vacancy decreased from 16.1 percent to 15.8 percent due to 2,666sqm of withdrawals
    • D Grade – Vacancy decreased from 14.7 percent to 14.4 percent due to 269sqm of net absorption
  • Civic’s vacancy rate increased from 12.0 percent to 12.3 percent due to -2,488sqm of net absorption
  • Vacancy in the Non Civic market decreased from 9.6 percent to 9.2 percent due to positive net absorption

 

Future supply:

  • 60,486sqm will be supplied in the second half of 2020
  • 4,496sqm is due to come online in 2021
  • 79,000sqm of space is due to come online from 2022 onwards
  • 90,000sqm of space is mooted

 

 

 

Key market indicators, Canberra (aggregate)

Grade

Vacancy,

Jul 20 (%)

Vacancy,

Jan 20 (%)

Net absorption, 6 months to

Jul 20 (sqm)

Net absorption, 12 months to

Jul 20 (sqm)

A

6.9

6.9

16,923

41,311

B

12.1

12.3

672

-3,307

C

15.8

16.1

-809

7,673

D

14.4

14.7

269

-420

Total

10.1

10.3

17,055

45,257