Adelaide office vacancy records modest decrease
Despite historically high overall vacancy rates in the Adelaide commercial office market, there has been a modest increase in tenant demand which signals green shoots for the state economy.
The Property Council of Australia’s latest Office Market Report has revealed a slight decrease in Adelaide CBD vacancy levels from 16.1 to 15.4 per cent, while Fringe vacancy increased from 10.1 to 11.4 per cent, in the six months to January 2018. The national average is 9.6 per cent.
“While the headline figures reveal a modest six-month decrease in the CBD vacancy rate, we shouldn’t be popping the champagne corks yet,” said SA Executive Director Daniel Gannon.
“There is almost 220,000sqm of vacant office space in the CBD, which is close to 50 per cent higher than the historic average. This amount of vacant space represents more than 10 Adelaide Oval playing surfaces.
“Of this total vacant space, 35 per cent sits across C and D Grade office stock.
“That said, there seems to be some green shoots in terms of positive tenant demand with 9,696sqm, while withdrawals totalled 1,235sqm in the six months to January 2018.
“Sublease vacancies – a metric commonly seen as a good indicator of a market’s health – has shown a healthy vacancy drop, meaning fewer tenants are leasing out part of their tenancies to absorb space or make-ends-meet.
“Worryingly, all grades of space have double digit vacancy except for the premium segment with no significant supply expected until 2019.
“Adelaide is facing myriad economic challenges right now and that means our policy-makers need to unashamedly make South Australia the most attractive investment destination in the country.
“Without sustainable population growth, the property sector and our state are at risk of losing investors and gaining more octogenarians.
“Attracting more large companies to South Australia is vital. When big companies move into a region, they bring staff and opportunities, and they also occupy CBD office space and create ecosystems of smaller businesses around them.
“That’s why the Property Council is still seeking to establish a Company Headquarters’ Taskforce to showcase our state to job-creating businesses.”
Daniel Gannon | E [email protected]