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Canberra’s Office Market records lowest vacancy in 12 years

ACT Executive Director, Adina Cirson, said the Property Council of Australia’s latest Office Market Report for the ACT reveals strong market demand, with the highest net demand of any commercial leasing sector in the country, and lowest vacancy since 2009. 

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 2021, Canberra’s overall vacancy rate dropped from 10.1 per cent, to 7.7 per cent, highlighting the continued tightening and resilience of the ACT office market. The Commonwealth employment base and long term tenancies in Canberra are no doubt helping drive positive demand for office space to prevail against the increasing vacancy trend seen across the country,” Ms. Cirson said.

“This is good news for the ACT, especially off the back of 2020. It is pleasing to see the Canberra market is still sitting below the average Australian office vacancy rate.

“Demand for prime office space is pushing record low vacancy rates – with A grade stock vacancy rates dropping from 6.4 percent to 3.5 percent. B Grade stock also saw a decrease from 11.2 percent to 8.6 percent, while the C and D Grade segments also recorded vacancy decreases. The Civic sublocale’s vacancy decreased from 12.8 percent to 8.5 percent.

“Nationally, the vacancy increased slightly from 11.6 to 11.9 percent and is at its highest since July 1996.  Average Australian CBD vacancy increased from 11.1 percent to 11.2 percent. Non-CBD markets also recorded a vacancy increase, from 13.0 percent to 13.6 percent, the highest level since January 1995,” Ms. Cirson said.

In regards to office occupancy rates, Ms. Cirson pointed out the importance to the economy of getting both the private sector and the public service to back into the office in accordance with public health advice.

“Office workers have been able to return to the office for work for more than a year given our low rate of transmission over the last 12 months and the work safety measures put in place by building owners across the city.  However, our office occupancy has stagnated at between 65-72 percent of pre-covid levels and the impact is being felt small business, office owners and retail tenants.”

“The Public Service represents more than 50 percent of the office market – and so them being at work is critical to keeping our economy going during this time.   What we don’t now want is to see a situation that because Sydney remains in a full lockdown that workers aren’t working from their Canberra offices and we go about our business as much as possible exercising safe work practices as we have always done,” Ms Cirson concluded.

Media contact:  Adina Cirson |M 0429 579 972 |E [email protected]

 

Office Market Report July 2021   

Analysis – Canberra market

Headline comments:

  • Canberra vacancy decreased over the period
  • This was due to positive demand and withdrawals
  • The positive demand was concentrated in the A Grade segment
  • The A and B Grade segments recorded single digit vacancy
  • There is some space in the pipeline over the short to medium term

Vacancy analysis:

  • Vacancy decreased from 10.1 percent to 7.7 percent over the six months to July 2021
    • A Grade – Vacancy decreased from 6.4 percent to 3.5 percent due to 40,310sqm of net absorption
    • B Grade – Vacancy decreased from 11.2 percent to 8.6 percent due to 17,184sqm of withdrawals
    • C Grade – Vacancy decreased from 17.4 percent to 16.7 percent due to 8,418qm of withdrawals
    • D Grade – Vacancy decreased from 15.4 percent to 14.7 percent due to 544sqm of net absorption
    • Civic’s vacancy rate decreased from 12.8 percent to 8.5 percent due to 21,102sqm of withdrawals and 10,770sqm of net absorption
    • Vacancy in the Non Civic market decreased from 8.9 percent to 7.4 percent due to 22,634sqm of net absorption and 4,500sqm of withdrawals
  • The decrease was due to 33,404sqm of net absorption and 25,602sqm of withdrawals
  • There were 2,400sqm of supply additions over the period

Future supply:

  • 45,055sqm will be supplied in the second half of 2021
  • 77,370sqm is due to come online in 2022
  • 18,128sqm of space is due to come online from 2023 onwards
  • 245,900sqm of space is mooted

 

Key market indicators, Canberra (aggregate)

Grade

Vacancy,

Jul 21 (%)

Vacancy,

Jan 21 (%)

Net absorption, 6 months to

Jul 21 (sqm)

Net absorption, 12 months to

Jul 21 (sqm)

A

3.5

6.4

40,310

87,921

B

8.6

11.2

-4,206

-6,337

C

16.7

17.4

-3,244

2,223

D

14.7

15.4

544

-259

Total

7.7

10.1

33,404

83,548