Office vacancy on the Gold Coast has dropped to single digits for the first time since 2008, reinforcing the strength of the local market.
The Property Council of Australia’s Mid-Year Office Market Report shows vacancy on the Coast has dropped from 10.1 per cent in January 2022, to 8.1 per cent as of July 2022.
Queensland Executive Director of the Property Council, Jen Williams, said that across nearly all markets on the Gold Coast, there has been a contraction in vacancy rates driven by strong demand.
“A Grade office across the various locales recorded the highest vacancy decrease, dropping from 11.5 per cent to 7.1 per cent over the six-month period,” Ms Williams said.
“This is consistent with the flight to quality we have seen over recent years, and the trend to more sustainable, collaborative workplaces,” she said.
“There is no doubt the Gold Coast continues to be a beneficiary of pandemic inspired lifestyle choices, with strong population growth leading to more workers- and therefore businesses- choosing to locate in South East Queensland.
“In the global war for talent, employers are seeing the physical office as a way to attract and retain staff.
“These strong figures are a testament to the performance of South East Queensland’s economy and the deserved recognition from business that the Sunshine State is the place to be.
“The Gold Coast has come a long way from its circa 20 per cent vacancy rates a decade ago.
“With demand set to continue, the new challenge for the Gold Coast will be building enough supply to meet the needs of the market,” Ms Williams said.
Tania Moore, Senior Director at CBRE, said that the historically low vacancy levels were being driven by demand from the SME sector and the return of education sector following the re-opening of international borders.
“The Gold Coast office market has continued to perform strongly with a 2% reduction in vacancy to 8.1% reflecting takeup of 6,901sqm for this six month reporting period,” Ms Moore said.
“The Gold Coast office market has not seen single digit vacancy since the 5 year period between 2004 to 2008 regardless of total office space increasing by 86,000 sqm at that time due to the emergence of the Robina/Varsity Lakes precinct and Southport Central which was supported by a 5 year average annual takeup of 15,400sqm per annum.
“Strong interstate migration has been driving the economy resulting in the ongoing demand from the SME sector as well as the re-emergence of the education sector following the opening of international borders to the student market.
“The flight to quality has continued with A grade vacancy reducing by almost 40% to under 5,800sqm and B grade vacancy reducing by 30% with under 13,000sqm available. These ongoing market conditions are creating occupier frustration due to the lack of available quality fitted suites within the 100-200sqm size range and for options of 1,000sqm plus and with limited new supply additions this will continue to be an ongoing issue for the foreseeable future. Landlords are starting to review rental rate growth and incentives on a regular basis due to the current market dynamics.
“The second half of 2022 will see the first new office building completion within the core Gold Coast office precincts being 26 Lawson Street, Southport with existing precommitments resulting in 1,200sqm being available to the market. The completion of the M1 Connect project in August will add 5,600sqm of new office space to the northern Gold Coast corridor supporting population growth outside of the core Gold Coast office precincts.
“There are a number of new developments being mooted however it is unlikely these projects will be completed until 2024 and beyond as they are subject to the appetite from developers to build without some level of substantial pre-commitment,” Ms Moore said.
ENDS