Overall demand for CBD office space has grown for the seventh straight period, with Australia’s tightening office markets reflecting a strengthening economy new figures show.
Vacancy across Australia’s office market fell from 10.2 per cent to 9.6 per cent over the six months to January 2018, according to the latest Office Market Report released by the Property Council today.
Vacancy dropped in three quarters of the office markets tracked by the report, with positive demand for office space and some supply withdrawals driving the results.
“Australia’s tightening office markets provide a window into a strengthening economy, and these results are certainly encouraging,” Property Council Chief Executive Ken Morrison said.
“Around the country we see Melbourne surging, Sydney tightening, Perth rebounding and Brisbane slipping.
“The Melbourne and Sydney markets – representing over half of Australia’s CBD office space – are both now extremely tight, with vacancy rates at just 4.6 per cent.
“Melbourne’s result has been driven by a surge in tenant demand while the withdrawal of buildings for future redevelopment and the new metro line were the key for Sydney.
“The report shows only a limited pipeline of new CBD office supply is scheduled over the next three years, with nearly 80 per cent of this to occur in Sydney and Melbourne, the markets that need it most.
“Pleasingly Perth experienced its second consecutive period of positive demand, at levels close to three times the historic average. While vacancy is still high, the Perth CBD seems to have turned the corner.
“In Brisbane CBD we are seeing the story of a market in transition with a significant drop in demand over the last six months, but with lots of evidence of a strong demand pipeline in the market.
“New supply drove the Canberra vacancy rate up to 13.1 per cent, although vacancy rates in A and B grade office stock were just half that of lower grade buildings.
“Adelaide is showing signs of picking up with a modest increase in tenant demand but more needs to be done pursuing opportunities for growth and further investment in the city.
“Hobart has been extremely dynamic, with the highest volume of new office space added to the CBD in a quarter of a century and vacancies holding, a really exciting result.
“While Darwin CBD once again has by far the highest vacancy rate across all capital cities, we did see some positive demand in that market.”