The January 2018 Office Market Report, released by the Property Council of Australia, shows Australia’s largest office markets are tightening.
Australian CBD office vacancy decreased over the six months to January 2018, from 10.4 to 9.8 per cent. Australian Non-CBD office vacancy also decreased from 9.6 to 9.1 per cent over the same period.
Property Council Chief Executive, Ken Morrison, noted that “Australia’s tightening office markets provide a window into a strengthening economy.”
Sydney CBD recorded the lowest vacancy in almost 10 years, with a high volume of withdrawn stock attributing to the low vacancy rate of 4.6 per cent. Jane Fitzgerald, NSW Executive Director, said “NSW had five of the top ten markets with the lowest vacancy rates in Australia demonstrating our state continues to foster successful emerging commercial office markets.”
Melbourne CBD’s result reflects the strong population growth and robust confidence levels. Strong demand levels pushed vacancy down from 5.9 to 4.6 per cent. Victorian Executive Director, Sally Capp said, “Melbourne has experienced the largest drop among Australian CBDs and now boasts the equal-lowest vacancy rate amongst all of Australia’s CBDs.”
The Brisbane CBD market is still in transition with overall negative tenant demand and vacancy increasing from 15.7 to 16.2 per cent. Queensland Executive Director, Chris Mountford attributed the vacancy increase to contractions in tenant demand for lower-grade stock across the CBD.
Despite Adelaide CBD vacancy falling from 16.1 to 15.4 per cent, there is still a large amount of vacant office space across the CBD. According to Daniel Gannon, SA Executive Director, there is almost 220,000sqm of vacant office space in the CBD, which is equivalent to more than 10 Adelaide Oval playing surfaces.
Perth CBD results seem to demonstrate a turnaround in office market health, with a second consecutive period of positive tenant demand lowering vacancy from 21.1 to 19.8 per cent. WA Executive Director, Lino Iacomella, noted that “The Perth CBD office market has turned the corner, and positive demand for new office space has returned after five difficult years.”
Canberra vacancy has increased from 11.6 to 13.1 per cent, with a large amount of this vacant space in the lower grades of stock. Adina Cirson, ACT Executive Director, said that “More incentives to convert tired and lower performing office spaces are urgently needed to meet the increasing demand for prime office product.”
Hobart CBD saw the largest amount of new office stock introduced to the market in 25 years. Despite high supply additions, vacancy only marginally declined from 8.2 to 8.1 per cent. Tasmanian Executive Director, Brian Wightman, specifically mentioned the increased demand for office space in the A Grade segment being extremely positive.
Darwin CBD once again recorded the highest vacancy rate across all capital cities at 21.6 per cent. Ruth Palmer, NT Executive Director, said “This is the third consecutive year Darwin has recorded the highest vacancy rate across all Australian office markets tracked.”
To purchase the Office Market Report, click here.