Australian office vacancies tighten
Office market vacancy rates across Australia fell from 9.6 per cent to 9.1 per cent over the six months to July 2018.
Melbourne’s office vacancy rate fell to a 10 year low of 3.6 per cent (down from 4.5 per cent in January 2018) – the lowest vacancy rate of all Australian CBDs.
“Office vacancy rates are a good measure of economic performance, and Melbourne is clearly the stand-out performer of the nation,” says the Property Council’s chief executive, Ken Morrison.
“Melbourne is our fastest growing city and best performing economy which in turn is creating strong jobs growth and demand for office space at more than twice its historical average.
“Most of the country’s future office supply over the next three years will be built in Melbourne, which is exactly where you want it – responding to strong demand.”
All CBD markets recorded vacancy rate declines.
Sydney’s market tightened further to 4.6 per cent, down from 4.8 per cent six months previously. Market withdrawals and positive demand are responsible for the drop in vacancy, and indicate a strong outlook for the state’s largest office market.
Brisbane’s results show a welcome return in market activity, with vacancy across the CBD dropping from 16.1 per cent to 14.6 per cent.
Perth has passed its peak vacancy, although at 19.4 per cent, the rate is still above the national average.
Vacancy rates have declined in Canberra, dropping slightly to 12.5 per cent. The commercial leasing sector is confident that demand for office space will increase as the Commonwealth – which represents over per cent of the market in the ACT – gets on with new whole-of-government leasing arrangements.
Adelaide’s CBD office vacancy rate has dropped for the third consecutive period, with fringe vacancy also falling. The 2.8 per cent CBD vacancy rate – the lowest level in the city since July 2012 – is evidence of the flight to quality.
“Across the country we are seeing a shift towards premium office quality, but a more challenging outlook for lower grades of stock,” Morrison explains.
He says the challenge for both planners and owners is to find solutions that encourage the use of secondary office stock to “help meet future demand and support vibrant and affordable commercial districts in both CBD and non-CBD areas”.
The non-CBD vacancy rate increased slightly from 8.9 per cent to nine per cent. The top three non-CBD markets were East Melbourne (3.1%), Parramatta (3.2%) and Macquarie Park (5.4%).
For a comprehensive range of property industry data, visit the Property Council’s Data Room.