SOUTH EAST QUEENSLAND OFFICE VACANCY STABLE
The first phase of the impact of COVID-19 on Australia’s office markets shows only moderate effects, reflecting the strong base settings in most CBD markets at the start of the pandemic.
Australian CBD office vacancy increased from 8.0 percent to 9.2 percent over the six months to July 2020 with flat – not falling – tenant demand, according to the Property Council of Australia’s Office Market Report.
Despite the COVID-19 pandemic, aggregate Australian vacancy remains below its historic average, with the key Sydney and Melbourne CBDs sitting at less than six percent vacancy.
Queensland Executive Director of the Property Council Chris Mountford said the impacts in the South East Queensland office markets broadly mirrored the national trends.
“Vacancy in Brisbane CBD increased from 12.7 to 12.9 percent over the past six months”, Mr Mountford said.
“It was a very similar story in the Brisbane fringe market with vacancy increasing from 13.6 to 14.2 percent.
“Importantly, both markets recorded positive tenant demand through this period, with the vacancy increases being driven by supply additions, not a reduction in demand for space.
“It is a slightly different story on the Gold Coast where the vacancy rate increased marginally from 12.8 to 13 percent, but this was driven by negative demand for space.”
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.
Key markets of Sydney and Melbourne CBD had vacancies of 5.6 percent and 5.8 percent respectively, while vacancies in Canberra are at 10.1 percent, Adelaide at 14.2 percent and Perth at 18.4 percent. All capital city markets recorded lower vacancy in prime over secondary stock.
Sublease vacancy in the capital cities – a key metric in falling markets – increased by 0.2 percent, but is still at modest levels compared to previous downturns.
Market analysts will be closely watching tenant demand and sublease vacancy over the next six months as the economic effects of the pandemic continues to play into office markets.
ATTACHED: Brisbane, Brisbane Fringe, Gold Coast office market analysis
Media contact: Chris Mountford | M 0408 469 734 | E [email protected]
Office Market Report July 2020
Analysis – Brisbane CBD market
Headline comments:
- Brisbane CBD vacancy increased in the six months to July 2020
- This was due to supply additions
- The A and C Grade segments recorded positive demand
- There is some space in the pipeline over the short to medium term
Vacancy analysis:
- Brisbane CBD’s vacancy rate increased from 12.7 percent to 12.9 percent
- This was due to 11,785sqm of supply additions
- 1,445sqm of space was withdrawn over the period
- Net absorption totalled 3,724sqm
Future supply:
- 1,604sqm of space is due to come online in the second half of 2020
- This will be followed by 44,000sqm in 2021
- 81,640sqm of space is due to come online from 2022 onwards
Key market indicators, Brisbane CBD (aggregate)
|
Grade |
Vacancy, Jul 20 (%) |
Vacancy, Jan 20 (%) |
Net absorption, 6 months to Jul 20 (sqm) |
Net absorption, 12 months to Jul 20 (sqm) |
|
Premium |
5.1 |
3.2 |
-6,313 |
12,167 |
|
A |
13.1 |
13.7 |
9,669 |
21,478 |
|
B |
15.3 |
14.3 |
-5,271 |
-6,215 |
|
C |
14.6 |
16.6 |
6,711 |
2,581 |
|
D |
24.8 |
21.0 |
-1,072 |
-2,706 |
|
Total |
12.9 |
12.7 |
3,724 |
27,305 |
Office Market Report July 2020
Analysis – Brisbane Fringe market
Headline comments:
- The Fringe market’s vacancy increased over the period
- This was due to supply additions
- All grades have vacancy above 11 per cent
- Only the B Grade segment recorded positive demand over the period
- There is some supply due to come online over the short to medium term
Vacancy analysis:
- Brisbane Fringe’s vacancy increased from 13.6 per cent to 14.2 per cent
- This was due to 10,084sqm of supply additions
- Net absorption totalled 801sqm
Future supply:
- 11,539sqm of space is due to come online in the second half of 2020
- This will be followed by 35,966sqm in 2021
- 24,000sqm is due to come online from 2022 onwards
- 164,438sqm is mooted for this market
Key market indicators, Brisbane Fringe (aggregate)
|
Grade |
Vacancy, Jul 20 (%) |
Vacancy, Jan 20 (%) |
Net absorption, 6 months to Jul 20 (sqm) |
Net absorption, 12 months to Jul 20 (sqm) |
|
A |
11.4 |
10.4 |
-6,404 |
-1,816 |
|
B |
15.0 |
16.7 |
15,868 |
10,812 |
|
C |
20.8 |
15.7 |
-8,663 |
-9,822 |
|
D |
40.7 |
40.7 |
0 |
0 |
|
Total |
14.2 |
13.6 |
801 |
-826 |
Office Market Report July 2020
Analysis – Gold Coast market
Headline comments:
- Vacancy in the Gold Coast office sector increased over the six months to July 2020
- This was due to negative demand
- All grades of space have double digit vacancy
- All grades of space recorded negative demand
- For the locales, negative demand was concentrated in Robina-Varsity Lakes
- There is some space due to come online over the next 18 months
Vacancy analysis:
- Vacancy increased from 12.8 percent to 13.0 percent over the six months to July 2020
- The vacancy increase was due to -3,179sqm of net absorption
By grade:
- A Grade – vacancy in this segment increased from 13.5 percent to 14.7 percent due to net absorption of -881sqm
- B Grade – vacancy decreased from 10.4 percent to 10.1 percent due to 1,996sqm of withdrawals
- C Grade – vacancy in this segment increased from 15.4 percent to 15.8 percent due to net absorption of -1,132sqm
- D Grade – vacancy increased from 18.2 percent to 18.4 percent due to -56sqm of net absorption
By locale:
- Broadbeach – vacancy decreased from 10.8 percent to 9.7 percent due to 329sqm of net absorption
- Bundall – vacancy decreased from 10.4 percent to 9.3 percent due to 9sqm of net absorption
- Robina-Varsity Lakes – vacancy increased from 13.0 percent to 15.0 percent due to net absorption of -4,473sqm
- Southport – vacancy decreased from 15.4 percent to 14.3 percent due withdrawals of 817sqm and net absorption of 762sqm
- Surfers Paradise – vacancy increased from 10.9 percent to 12.0 percent due to -747sqm of net absorption
Future supply:
- There is 6,572sqm of space in the pipeline for the second half of 2020
- This will be followed by 2,832sqm in 2021
- A total of 8,727sqm of projects are mooted
Key market indicators, Gold Coast (aggregate)
|
Grade |
Vacancy, Jul 20 (%) |
Vacancy, Jan 20 (%) |
Net absorption, 6 months to Jul 20 (sqm) |
|
A |
14.7 |
13.5 |
-881 |
|
B |
10.1 |
10.4 |
-1,110 |
|
C |
15.8 |
15.4 |
-1,132 |
|
D |
18.4 |
18.2 |
-56 |
|
Total |
13.0 |
12.8 |
-3,179 |
Key market indicators, Gold Coast (by locale)
|
Locale |
Vacancy, Jul 20 (%) |
Vacancy, Jan 20 (%) |
Net absorption, 6 months to Jul 20 (sqm) |
|
Broadbeach |
9.7 |
10.8 |
329 |
|
Bundall |
9.3 |
10.4 |
9 |
|
Robina-Varsity Lakes |
15.0 |
13.0 |
-4,473 |
|
Southport |
14.3 |
15.4 |
762 |
|
Surfers Paradise |
12.0 |
10.9 |
-747 |