Canberra office vacancy rates align with expectations
The vacancy rate in Canberra increased over the past six months to 13.6 per cent, according to the Property Council of Australia’s Office Market Report.
Canberra’s office market vacancy rate increased from 12.9 per cent reported in January 2014, to the highest level of vacancy since July 2010.
The increase in vacancy within the Canberra office market has come about primarily because of supply additions into the market, combined with negative demand. All grades of space in Canberra are above 11 per cent in terms of vacancy.
Civic’s vacancy rate increased from 10.6 per cent to 11.5 per cent due to 20,474sqm of supply additions. Net absorption was 12,694sqm.
Vacancy in the Non Civic market increased from 13.7 per cent to 14.5 per cent due to net absorption of -13,101sqm and supply additions of 7,844sqm. Withdrawals over the period totaled 8,215sqm.
Property Council of Australia ACT Executive Director, Catherine Carter says, “The high vacancy rates are largely a reflection of Commonwealth Government decision making with respect to public service employment numbers and office accommodation requirements.
“One of the notable features of the Canberra office market is that in the past six months the upper grades experienced positive demand, while the lower grades experienced negative demand. This highlights that further consideration needs to be given to the introduction of policies and programs to facilitate the upgrading or conversion of existing buildings to new uses, in order to promote growth in the areas of the city that need it.
“The ACT Government has already taken steps to address this issue, through the introduction of its February 2014 economic stimulus package aimed at providing confidence and stimulus into the ACT economy.
“However, in light of increasing vacancy rates, it is now timely to review changes made to the lease variation charge system to assess whether further remissions may be needed in order to stimulate activity in the market and drive economic activity. The Property Council looks forward to continuing discussions with the ACT Government on this issue,” Ms Carter concluded.
Snapshot – Canberra by Grade:
- A Grade – Vacancy decreased from 12.9 per cent to 12.6 per cent due to 4,097sqm of net absorption
- B Grade – Vacancy decreased from 12.7 per cent to 12.0 per cent due net absorption of 22,872sqm and supply additions totaling 22,404sqm
- C Grade – Vacancy increased from 11.9 per cent to 15.1 per cent due to net absorption of -25,010sqm and supply additions of 3,918sqm. Withdrawals totaled 5,954sqm
- D Grade – Vacancy increased from 20.3 per cent to 20.9 per cent due to net absorption of -2,366sqm. 2,261sqm of space was withdrawn over the period.
Future supply:
- A total of 24,0sq m of new space is due to enter the market in the second half of 2014
- This will be followed by 23,329sqm in 2015
- 9,000sqm is to enter the market from 2016 onwards and 91,2sqm of stock is mooted.
Key market indicators, Canberra (aggregate)
| Grade | Vacancy, Jul 14 (%) | Vacancy, Jan 14 (%) | Net absorption, 6 months to Jul 14 (sqm) | Net absorption, 12 months to Jul 14 (sqm) |
| A | 12.6 | 12.9 | 4,097 | 45,149 |
| B | 12.0 | 12.7 | 22,872 | -36,474 |
| C | 15.1 | 11.9 | -25,010 | 24,214 |
| D | 20.9 | 20.3 | -2,366 | 9,188 |
| Total | 13.6 | 12.9 | -407 | 42,077 |
Media contact
Catherine Carter
ACT Executive Director
02 6248 6902 or 0412 330 079
John Nguyen
National Research Manager
02 9033 1943 or 0408 637 164
For more information, visit www.propertyoz.com.au/officemarketreport