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Gold Coast office market records vacancy increase

A fall in demand for office space on the Gold Coast has seen vacancy rates increase across the city over the final half of 2019.

The Property Council of Australia’s latest Office Market Report, released today, shows that over the first six months of 2019, Gold Coast office vacancy rose from 11.6 to 12.9 percent due to reduced tenant demand.

“While Gold Coast’s vacancy rate has been largely stable over recent years, the fall in office demand over the first six months of this year should be a cause for concern,” Queensland Executive Director of the Property Council, Chris Mountford, said.

“We’ve witnessed a fairly consistent increase in vacancy levels on the Gold Coast across all office grades and in nearly all locations, with only B Grade building recording a modest decrease in vacancy.”

“While we are a long way from the 20%+ vacancy experienced on the Gold Coast in the first half of this decade, any increase in vacancy is unwelcome news of the city’s economy,”

The decline in the city’s demand for office space is in contrast to increases in demand for space in the Brisbane CBD and Brisbane Fringe office markets, which both recorded healthy decreases in vacancy over the first half of 2019.

“Unfortunately, the Government’s decision to dramatically increase land tax in the recent State Budget sends the wrong message at the wrong time.”

“Overseas investors play a critical role in the development of new office projects on the Gold Coast.”

“Targeting these investors with astronomical tax increases will only result in higher rents for Queensland businesses, and a slowing of the market’s momentum.”

The Property Council is engaging with the Queensland Government to influence the final structure of the new 2% foreign land tax surcharge.

Media contact: Chris Mountford|  M  0408 469 734 |   E  cmountford@propertycouncil.com.au

 

Office Market Report July 2019

Analysis – Gold Coast market

Headline comments:

  • Vacancy in the Gold Coast office sector increased over the six months to July 2019
  • This was due to negative demand
  • All grades of space have double digit vacancy
  • Only the B Grade segment recorded positive demand
  • All locales recorded negative demand and vacancy increases
  • There is some space due to come online over the next 18 months

 

Vacancy analysis:

  • Vacancy increased from 11.6 percent to 12.9 percent over the six months to July 2019
  • The vacancy increase was due to -6,850sqm of net absorption

 

By grade:

  • A Grade – vacancy in this segment increased from 11.9 percent to 14.4 percent due to net absorption of -3,233sqm
  • B Grade – vacancy decreased from 11.0 percent to 10.7 percent due to 543sqm of net absorption
  • C Grade – vacancy in this segment increased from 12.3 percent to 15.1 percent due to net absorption of -4,113sqm
  • D Grade – vacancy increased from 10.7 percent to 11.0 percent due to -47sqm of net absorption

 

By locale:

  • Broadbeach – vacancy increased from 9.9 percent to 11.7 percent due to -559sqm of net absorption
  • Bundall – vacancy increased from 9.4 percent to 11.2 percent due to -1,564sqm of net absorption
  • Robina-Varsity Lakes – vacancy increased from 12.0 percent to 13.2 percent due to net absorption of -1,605sqm
  • Southport – vacancy increased from 13.6 percent to 15.1 percent due to net absorption

of -2,679sqm

  • Surfers Paradise – vacancy increased from 9.8 percent to 10.5 percent due to -443sqm of net absorption

 

Future supply:

  • There is 635sqm of space in the pipeline for the second half of 2019
  • This will be followed by 8,769sqm in 2020
  • A total of 8,727sqm of projects are mooted

Key market indicators, Gold Coast (aggregate)

Grade

Vacancy,

Jul 19 (%)

Vacancy,

Jan 19 (%)

Net absorption, 6 months to

Jul 19 (sqm)

Net absorption, 12 months to

Jul 19 (sqm)

A

14.4

11.9

-3,233

-1,650

B

10.7

11.0

543

321

C

15.1

12.3

-4,113

-2,451

D

11.0

10.7

-47

-84

Total

12.9

11.6

-6,850

-3,864

 

 

Key market indicators, Gold Coast (by locale)

Locale

Vacancy,

Jul 19 (%)

Vacancy,

Jan 19 (%)

Net absorption, 6 months to

Jul 19 (sqm)

Net absorption, 12 months to

Jul 19 (sqm)

Broadbeach

11.7

9.9

-559

-1,388

Bundall

11.2

9.4

-1,564

-1,601

Robina-Varsity Lakes

13.2

12.0

-1,605

86

Southport

15.1

13.6

-2,679

-1,526

Surfers Paradise

10.5

9.8

-443

565