An opportunity for structural reform
Hobart’s CBD office market vacancy rate has increased from 7.3 per cent to 8.9 per cent, due to supply addition and negative demand, according to the Property Council of Australia’s Office Market Report (OMR).
Whilst this data comes off the back of reports pointing to signs of economic recovery, it also underscores the need for a raft of reforms required to deliver sustainable improvement.
Property Council Tasmanian Executive Director, Brian Wightman said that although owners and investors have understood this position for a long period of time and would not be surprised by the numbers, the OMR reinforces the need for a structural reform agenda.
“The increase in office market vacancies is disappointing, however a number of other surveys and economic indicators have highlighted improved business confidence in Tasmania.”
“What is desperately needed to drive efficiencies that deliver lower cost, a higher rate of return and improved confidence, is structural reform. Property developers, owners and investors are continuously stifled by 29 Councils – including 29 different sets of unique bureaucracies.”
“‘It’s just too difficult’ is a sentiment often articulated regarding investment in Tasmania. We can’t afford that type of negative thinking, the survey results are a wake-up call and it’s quite clearly time to act,” Mr Wightman reiterated.
Mr Wightman said that the increase of the headline figure 7.3 per cent to 8.9 per cent, demonstrated a need for strategic reform policies to grow the economy and increase employment to ensure tenant demand for the 20,709sqm coming into the Hobart market from 2017 onwards.
There are four grades of office accommodation surveyed in the OMR, with A Grade being high grade space, B Grade being quality space, C Grade of average quality and D Grade being inferior quality.
“The survey revealed that only the B Grade segment recorded a vacancy decrease over the period,” Mr Wightman said.
Mr Wightman said that the Property Council looked forward to working with the State Government and stakeholders as reform partners, leading and delivering change which drives a more prosperous and wealthy Tasmania in every way.
“The industry needs a significant reform agenda implemented across local government, planning, tax, and red and green tape reduction to maintain private investor confidence and increased employment, which are all necessary for a sustainable economic revival.”
“As the leading industry advocate in Tasmania we look forward to assisting the State Government in its reform efforts and acknowledge the appointment of the Coordinator General who can have a direct impact on reducing office vacancies in our CBD’s,” Mr Wightman said.
For further comment:
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Brian Wightman |
John Nguyen |
Attached: Further vacancy analysis
Headline comments:
- Hobart’s vacancy increased in the year to January 2015;
- This was due to supply additions and negative demand;
- Only the B Grade segment recorded a vacancy decrease over the period;
- There is no significant amount of space in the pipeline until 2017.
Vacancy analysis:
- Hobart experienced an increase in vacancy from 7.3 percent to 8.9 percent;
- This was due to 9,555sqm of supply additions and -2,303sqm of net absorption;
- 5,870sqm of space was withdrawn;
- Only the B Grade segment recorded a vacancy decrease over the period.
Future supply:
- 994sqm is due to come online in 2015;
- There is no space in the pipeline for 2016;
- From 2017 onwards 20,709sqm of space is due to be completed;
- 3,790sqm of projects are mooted.
Key market indicators, Hobart (aggregate)
|
Grade |
Vacancy, Jan 15 (%) |
Vacancy, Jan 14 (%) |
Net absorption, 12 months to Jan 15 (sq m) |
Net absorption, 12 months to Jan 14 (sq m) |
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A |
5.7 |
3.1 |
3,814 |
2,207 |
|
B |
12.7 |
14.6 |
-440 |
1,851 |
|
C |
13.0 |
11.0 |
-4,237 |
1,556 |
|
D |
10.5 |
6.4 |
-1,440 |
-317 |
|
Total |
8.9 |
7.3 |
-2,303 |
5,297 |
More information available at www.propertyoz.com.au/officemarketreport