Canberra office vacancy rate rises slightly but demand hot for prime office space
In the Property Council of Australia’s latest Office Market Report, Canberra, has once again highlighted an urgency to deal with the disparity between demand for new over old office space.
“Over the six months to January 2018, Canberra’s overall vacancy rate has increased from 11.6 per cent to 13.1 per cent – due to greater supply of 51,364sqm,” Property Council ACT Executive Director Adina Cirson said today.
“We have returned to the vacancy of 12 months ago overall, with vacancy rates in Civic and Non Civic markets both increasing to 11.3 per cent and 13.7 per cent respectively. We have seen a significant increase in supply additions outside of Civic, with 41,329sqm new supply mainly attributed to the new DSS Headquarter Building in Tuggeranong.
“The good news is that withdrawals have decreased down from 32,616sqm 12 months ago to 12,268sqm. An additional 16,460spm of new space is due to enter the market later this year, with 15,500sqm in 2019, and 69,000sqm from 2020 onwards.
“That said, the vacancy rates across the country vary from Sydney and Melbourne CBD both at 4.6 per cent to that of Darwin CBD with the highest vacancy rate of 21.6 per cent. In comparison, Canberra is in a reasonable position nationally – but this certainly does not mean we should rest easy,” Ms Cirson said.
Ms Cirson said more incentives to convert tired and lower performing office spaces are urgently needed to meet the increasing demand for prime office product. Prime stock vacancy in Canberra is less than half that of the older office segments. A Grade office vacancy is at 8.5 per cent compared to C and D Grade office vacancy, which continues to be of concern, sitting at 21.4 per cent.
“We see yet again a tightening in the amount of available prime office space, with A Grade vacancy once again decreasing. Tenants are clearly seeking spaces which not only meet the changing workplace needs, but also the desire to have more sustainable and higher performing buildings,” Ms Cirson said.
Demand played a key role in the vacancy changes across the four grades of office space. In the six months to January 2018, A Grade vacancy decreased from 9.8 to 8.5 per cent, and B Grade vacancy recorded an increase from 8.9 to 11 per cent. This is compared to the big jump in C Grade vacancy, from 15.3 to 21.7 per cent, and D Grade now at 19 percent.
“The ACT property industry believes it is critical that urban renewal for our city also means ensuring we have the best office product on offer, creating incentives for new and existing businesses to establish and invest here before Sydney and Melbourne.
“We want to have the best workplaces in the country, and to do that, we need to make sure we are creating the right environment for building owners to deliver them,” Ms Cirson concluded.
Adina Cirson | E firstname.lastname@example.org