Canberra office vacancy rate falls but renewal of old office space needed
In the Property Council of Australia’s latest Office Market Report, Canberra recorded the third largest vacancy decrease of all Australian capital cities behind Brisbane and Melbourne, but also highlighted an urgency to deal with the disparity between demand for new over old, office space.
“Over the last six months to January 2017, Canberra’s overall vacancy rate decreased from 13.0 percent to 12.6 percent over the six months to January 2017, dropping two full percentage points since this time last year. The vacancy rate in Civic also decreased from 10.3 to 9.4 per cent, which is good news for our CBD, ACT Executive Director, Adina Cirson said.
“Unfortunately, unlike the previous 6 months, the decrease is largely a result of withdrawal of stock, rather than positive demand. There were 32,616sqm of withdrawals recorded across the board.
“That said, the vacancy rates across the country vary from Sydney at 6.2 per cent to that of Perth and Darwin with the highest vacancy rates of 22.5 per cent, so Canberra is in a reasonable position nationally – but certainly does not mean we should rest easy,” Ms Cirson said.
Ms Cirson said that more incentives to convert tired office space are urgently needed to meet the increasing demand for premium office product, with vacancy rates in the higher grades of space in Canberra less than half that of secondary office space.
“This is particularly critical with no new supply in the pipeline beyond 2019. Canberra is really starting to boom, and with the investments being made across the city - both by the private sector and government, I believe we will see an increase in demand, but it will be for premium product,” Ms Cirson said.
The demand for premium office space is a combination of positive demand and withdrawals, which saw A Grade vacancy decrease from 9.9 to 9.8 per cent (3.2 percent lower than January 2016), and B Grade vacancy increasing to 8.7 per cent. This compared to the still very high vacancy rates of 18.7 percent and as high as 23.1 percent in C and D grade office space respectively despite slight improvements.
“This is the market in action, showing a clear preference for higher grade office space over lower grades.
“The ACT property industry believes that it is important that urban renewal for our city, also means ensuring we have the best office product on offer which creates incentives for new and existing businesses to establish and invest here before Sydney and Melbourne.
“We intend to continue to work with the ACT Government to get the policy settings right, and maintain the momentum at this important and exciting time for our city," Ms Cirson concluded.
For more information or to purchase the January 2017 Office Market Report, click here.
Media contact: Adina Cirson | E [email protected]