Canberra office vacancy rate continues to fall with high demand for prime office space
The Property Council of Australia’s latest Office Market Report once again shows vacancy rates on the decline overall in the Canberra market, but the report has also highlighted the huge disparity between demand for new, over old and tired office stock.
“Over the last six months to July 2017, Canberra’s overall vacancy rate decreased from 12.6 percent to 11.4 percent, recording the second largest decrease across the capital cities, just behind Perth. The vacancy rate in Civic remained relatively steady, rising slightly from 9.4 to 9.5 percent,” ACT Executive Director, Adina Cirson said.
“It is also good to see that the overall decrease is due to positive demand rather than just withdrawal of stock, with 23,431sqm of net absorption and 15,048sqm of withdrawals bringing vacancy down in the Capital.
“That said, we remain above the net Australian vacancy rate which sits at 10.2 percent,” Ms Cirson said.
A Grade office product demand saw a decrease in vacancy from 9.8 percent to 9.4 percent and B Grade vacancy increasing slightly to 8.9 percent – due to new supply additions. This places in stark contrast the vacancy rates of older office stock with 15.3 percent and 22.9 percent in C and D grade office spaces respectively, despite slight improvements.
“This is the market in action, showing a clear preference for higher grade office space, and we need to act quickly to make it more attractive for investors to convert tired office spaces into refreshed, higher quality, more sustainable stock. This is particularly relevant in the Woden Town Centre, where we need to prioritise renewal of our oldest office buildings.
“This point is well demonstrated by looking ahead at the supply pipeline. While we are seeing some new supply over the next 18 months, the supply for the type of office space people are wanting to occupy will need to wait for 2019 and beyond to see major supply. This indicates a pressing need to ensure we are revitalising the older stock to keep up supply over the longer term.
“Renewing our office stock is critical if we are going to make it attractive for new and existing businesses to establish and invest here before Sydney and Melbourne – and that needs to be our focus.
“We will 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.
Media contact: Adina Cirson |E [email protected]
Office Market Report July 2017: Analysis – Canberra market
- Canberra recorded a vacancy decrease over the period
- This decrease was due to positive demand and withdrawals
- The higher grades of space in Canberra recorded lower vacancies
- There is some space in the pipeline over the short to medium term
- Vacancy decreased from 12.6 percent to 11.4 percent over the six months to July 2017
- This was due to 23,431sqm of net absorption and 15,048sqm of withdrawals
- 10,950sqm of space was added over the period
- A Grade – Vacancy decreased from 9.8 percent to 9.4 percent due to 4,053sqm of net absorption
- B Grade – Vacancy increased slightly from 8.7 percent to 8.9 percent due to 10,950sqm of supply additions
- C Grade – Vacancy decreased from 18.7 percent to 15.3 percent due to 19,394sqm of net absorption and 4,140sqm of withdrawals
- D Grade – Vacancy decreased from 23.1 percent to 22.9 percent due to 5,030sqm of withdrawals
- Civic’s vacancy rate increased slightly from 9.4 percent to 9.5 percent
- Vacancy in the Non Civic market decreased from 13.8 percent to 12.2 percent primarily due to 25,980sqm of net absorption
- A total of 17,928sqm of new space is due to enter the market in the second half of 2017
- This will be followed by 2,430sqm in 2018
- 20,000sqm is due to come online from 2019 onwards
- 92,177sqm of stock is mooted