Office Market Report released

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According to the Property Council of Australia’s Northern Territory office market report, the supply of A and B-grade office buildings has shrunk in the last year, while C-grade buildings have seen increased vacancies.

Executive Director of the Property Council Northern Territory Division, Ruth Palmer said that government tenancy demands have a significant impact on supply and demand fundamentals, particularly for A-grade office buildings.

“We have seen that non-government office demand has gradually increased in these higher-quality buildings, but construction costs and current market rental returns are posing some commercial feasibility issues.

“Vacancies in C-Grade buildings have been increasing, and these older structures are facing lower market rental returns and increased red tape.

“Unfortunately, without genuine reforms to activate and revitalise these older buildings, there is little chance of a significant improvement in the high vacancy rate.

“We believe that there are several reforms that the NT government could implement to revitalise lower-grade vacant buildings.

“Given the severe shortage of student and worker housing in the CBD, the NT government could use these buildings to provide low-cost housing and provide grants to developers to assist with the cost of renovations.

Another option, according to the Property Council, would be to provide tax breaks and other incentives for Student accommodation conversion. This could include lowering property taxes, lowering permit fees, or providing grants for building renovations that ensure the building meets current and upcoming code requirements.

“Finally, there is no space in the pipeline in the short to medium term, implying that the current trend of decreased vacancy will likely continue.

Overall, there is a positive market trend for office space in Darwin CBD; however, it is important to note that the lower grade segments continue to suffer from high vacancy rates and will remain vacant in the absence of demand or reform.” Ms Palmer said.

Grade Vacancy,

Jan 23 (%)

Vacancy,

Jan 22 (%)

Net absorption, 12 months to Jan 23 (sqm)
A 6.4 9.3 4,255
B 22.2 28.4 4,796
C 56.4 52.6 -669
Total 14.3 17.6 8,382

Media contact: Ruth Palmer | M 0450 428 314  |  E [email protected]