Positive demand drives Melbourne’s vacancy rate down again
Melbourne’s office market continues to defy the critics with the Melbourne CBD vacancy rate decreasing from 8.7 per cent to 8.5 per cent according to the Property Council of Australia’s Office Market Report.
Victorian Executive Director of the Property Council, Jennifer Cunich, said positive demand was helping drive down Melbourne’s already low vacancy rate. Our city presently has the second lowest vacancy rate amongst all of Australia’s CBDs.
“A total of 80,835sqm of new stock is due to enter the market in the second half of 2014,” says Ms Cunich. “In 2015, a further 115,624sqm will come online with 58,000sqm of projects planned for 2016 onwards.
“During the last six months, supply additions were at 30,534sqm, with 5,894sqm of withdrawals and 29,291sqm of net absorption.
“The Civic precinct’s vacancy rate decreased from 10.4 per cent to 6.8 per cent leading the downward trend in vacancy amongst Melbourne’s various locales. This was solely due to 17,243sqm in net absorption.
“The North Eastern and Docklands precincts continue to have the lowest vacancy rates in Melbourne at 2.7 and 4.0 per cent respectively. There is no space in the pipeline for Southbank or St Kilda Road in the short term.
“Vacancy in the Western Core precinct in the six months to July 2014 increased from 8.6 per cent to 9.5 per cent, due to net absorption of -1,322sqm.
“Strong positive demand in Melbourne’s office market reinforces the foresight taken in deciding to expand the CBD’s footprint into Fisherman’s Bend.
“Now that the Fisherman’s Bend Master Plan is in place, it is vital that the State Government, its Metropolitan Planning Authority and local councils get on with the job of building an even greater city.”
The Property Council’s six-monthly Office Market Report has been the industry’s most respected independent office market research publication for more than 20 years.
Key market indicators, Melbourne CBD (aggregate)
| Grade | Vacancy, Jul 14 (%) | Vacancy, Jan 14 (%) | Net absorption, 6 months to Jul 14 (sqm) | Net absorption, 12 months to Jul 14 (sqm) |
| Premium | 7.2 | 8.0 | 5,577 | 15,680 |
| A | 6.6 | 6.3 | 14,331 | 32,679 |
| B | 13.9 | 13.5 | 742 | -26,143 |
| C | 9.7 | 11.6 | 8,741 | 11,715 |
| D | 2.9 | 2.9 | -100 | -128 |
| Total | 8.5 | 8.7 | 29,291 | 33,803 |
Key market indicators, Melbourne (by locale)
| Vacancy, Jul 14 (%) | Vacancy, Jan 14 (%) | Net absorption, 6 months to Jul 14 (sqm) | Net absorption, 12 months to Jul 14 (sqm) | |
| Civic | 6.8 | 10.4 | 17,243 | 31,634 |
| Docklands | 4.0 | 4.0 | 1,779 | 7,566 |
| Eastern Core | 8.7 | 8.4 | 6,076 | 14,622 |
| Flagstaff | 15.9 | 16.5 | 2,047 | -9,169 |
| North Eastern | 2.7 | 2.5 | -551 | 745 |
| Spencer | 18.0 | 19.9 | 4,020 | 176 |
| Western Core | 9.5 | 8.6 | -1,323 | -11,771 |
Media contact
Jennifer Cunich
Victoria Executive Director
03 96 8300 or 0411 118 099
John Nguyen
National Research Manager
02 9033 1943 or 0408 637 164
For more information, visit www.propertyoz.com.au/officemarketreport