Thursday 6 February 2025
MEDIA RELEASE
Newcastle Office Market Star Performer in 2024
The Newcastle office market has been one of the star performers nationally over the past year, with a significant decrease in vacancy rates driven by strong tenant demand, according to the latest Property Council of Australia Office Market Report for January 2025.
Property Council Hunter and Central Coast Regional Director Amy De Lore said the results reflect Newcastle’s growing appeal as a dynamic commercial hub, with a steady stream of new development set to support the city’s continued growth.
“Newcastle’s vacancy rate has dropped to 14.9 per cent, down from 16.4 per cent a year ago, thanks to 7,814 sqm of net absorption – which means more space being leased than vacated – across the market,” Ms De Lore said.
“This is an encouraging result for the region and demonstrates that businesses are increasingly recognising Newcastle as a highly attractive place to operate, with excellent connectivity, lifestyle benefits, and a strong local economy.”
Demand has been particularly strong for A-grade office spaces, which recorded 7,509 sqm more space leased than vacated over the year.
Ms De Lore said the rise in A-grade occupancy had been fuelled by the lease of several large new office spaces, including the lease by Colliers to Ausgrid of more than 3000 sqm of office space at 42 Honeysuckle Drive.
“There are a number of trends driving the uplift, including an increasing preference for quality – in part to bring workers back to the office more often – and the attraction of a CBD location, another big plus for staff retention and talent attraction,” Ms De Lore said.
“It’s not just the large corporates looking for quality, many small and medium-sized business are also in the market for more salubrious surroundings to keep workers happy and are increasingly looking for office space that comes fitted-out to save on relocation costs.
“Many firms and employees also place high priority on ‘green building’ credentials, which gives new buildings another edge.”
Ms De Lore noted that challenges remain in the D-grade segment, where 491 sqm more space was vacated than leased.
“Older stock is struggling to compete with modern, high-quality office spaces, which are better aligned with tenant expectations for amenities, sustainability and functionality,” Ms De Lore said.
“This trend underscores the importance of continued investment in upgrading and refurbishing commercial spaces to meet market demand.”
Key highlights for Newcastle from the January 2025 Office Market Report:
- Total vacancy fell from 16.4 per cent to 14.9 per cent over the year to January 2025, driven by 7,814 sqm of net absorption
- A-grade spaces saw the strongest demand, with vacancy decreasing from 17.9 per cent to 16 per cent and 7,509 sqm of net absorption
- Vacancy in B-grade spaces decreased from 13.1 per cent to 11.2 per cent, reflecting 111 sqm of net absorption
- C-grade spaces saw a decline in vacancy from 19.9 per cent to 18.7 per cent, with 685 sqm of net absorption
- D-grade spaces struggled, recording a vacancy increase to 9.3 per cent due to -491 sqm of net absorption
- Future supply includes 3,100 sqm of new office space expected in 2025, followed by 3,650 sqm in 2026, with an additional 8,571 sqm mooted for the coming years.
The Property Council of Australia Office Market Report is released twice a year, providing detailed insights into office markets across Australia. For more information, visit: www.propertycouncil.com.au/news-research/research/office-market-report.
END
Media: Andrew Parkinson | 0404 615 596 | [email protected]