Office market report

While vacancy rates remain high in some centres, they are no longer facing significant new office supply coming on to the market. Almost three quarters of the new CBD office supply over the next two and a half years is coming in Sydney and Melbourne, the cities which are best placed to handle it.

Ken Morrison, Chief Executive - Property Council of Australia.

Covering approximately 5,000 office buildings in over 25 office markets around Australia, the Office Market Report includes historical data since January 1990 for total stock, vacancy, supply, withdrawals and net absorption, with a comprehensive list of future supply and development details.

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Key Findings

  • The Sydney CBD vacancy rate fell from 6.2 per cent to 5.9 per cent continuing its run as the CBD with the lowest vacancy rate. The fall was due to withdrawals of office space from the market and positive tenant demand. Over the coming six months, Sydney CBD will provide 48,595 sqm of new stock.
  • The Melbourne CBD vacancy rate has remained steady at 6.5 per cent. Eastern Core and Docklands precincts have the lowest vacancy rates in Melbourne at 2.6 per cent and 2.1 per cent respectively, while Southbank’s vacancy decreased from 4.1 per cent to 3.3 per cent as a result of 4,595 sqm of stock withdrawals.
  • The Brisbane CBD vacancy rate has increased from 15.3 per cent to 15.7 per cent. Much of this can be attributed to the contraction of government leases following the larger increase in demand and consolidation into 1 William Street last half.
  • The Perth CBD vacancy rate has retreated from its peak of 22.5 per cent in January to 21.1 per cent. While this is still the highest vacancy rate in Australia, the good news is that in the first six months of 2017, demand was three times the historic average. With very little new stock expected until late 2018, Perth is showing every indication that it is stabilising.
  • The Adelaide CBD vacancy rate inched down from 16.2 per cent to 16.1 per cent. The vacancy rate is over 30 per cent higher than the Adelaide historic average. While it appears that some older stock is transitioning into residential accommodation, the market requires economic and population growth delivered across South Australia.
  • The Canberra vacancy rate fell from 12.6 per cent to 11.4 per cent. The supply pipeline beyond 2018 is extremely low indicating that Canberra has a serious issue around attracting property investment and needs to revitalise old stock.

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