Darwin CBD vacancy rates

Darwin CBD vacancy ratesThere is growing concern about the commercial vacancy rates in the Darwin CBD and over some weakness in Retail and Tourism activity around the Top End.Since 2012, demand for office space in the Territory has been weak. The combination of lower demand and a large increase in supply entering the market will see a significant increase in vacancy rates this calendar year. There is broad consensus in the property sector that the vacancy rates will remain relatively high for the foreseeable future. The market conditions have also started to put downward pressure on rental rates and this will likely continue in the medium-term. The Northern Territory Government occupy a large majority of the commercial office space in the Territory. They effectively control the office market so it is critical that they don’t further deteriorate the market by encouraging further construction of office space in the Territory. Many in the industry believe that it could take a significant amount of time before the excess supply within the market is absorbed. Given the very high likelihood of high vacancy rates over the long-term, it’s possible that we may see some older office buildings being converted into either serviced accommodation or units over the next few years.Latest retail statistics show that the Darwin city centre needs further investment to make it more attractive to both businesses and residents. The Sensis Business Index reports that 18 per cent of Territory businesses are worried about the year ahead, while Department of Treasury and Finance statistics reveal a 0.8 per cent decrease in retail sales through the year to April 2015.The Property Council has been a strong advocate for the Darwin City Centre Master Plan and we are pleased to see that the Plan has been finalised and that work as commenced on some of the projects identified in the plan. We need both tiers of government to commit to improving the services and amenities in the city centre to give retailers, investors, developers and traders the confidence to invest.