The January 2019 Office Market Report, released by the Property Council of Australia, reveals growing demand for office space is driving down vacancy rates in CBDs across Australia, with Melbourne and Sydney at decade-lows. A market-by-market wrap is below:
The Sydney CBD vacancy rate dropped from 4.6 per cent to 4.1 per cent in the six months to January 2019 mainly due to withdrawals from the market. “Competition is good, and Australia has two of the strongest office markets in the Asia Pacific region, however Sydney is losing ground on our southern neighbour [Melbourne] in terms of both space in the pipeline and demand,” NSW Executive Director Jane Fitzgerald said.
The office market vacancy rate for Melbourne CBD has reached a 10-year low and remains the lowest of any Australian CBD, dropping from 3.6 per cent to 3.2 per cent over the last six months. “Melbourne has a sustained period of strong demand and again boasts the lowest vacancy rate amongst all of Australia’s CBDs,” said Victorian Executive Director, Cressida Wall.
Brisbane CBD recorded vacancy rates falling from 14.7 per cent in July 2018 to 13.0 per cent in January 2019. Chris Mountford, Queensland Executive Director, said, “This result is a product of positive tenant demand, combined with the withdrawal of half of the Brisbane Transit Centre - making way for the Cross River Rail project.”
The Adelaide CBD office vacancy rate has dropped for the fourth consecutive period, from 14.7 to 14.2 per cent in the six months to January 2019. “While Adelaide’s CBD has 203,000 sqm of office vacancy - the equivalent of 10 Adelaide Oval playing surfaces - this figure has decreased for the fourth consecutive period,” SA Executive Director Daniel Gannon said.
Office vacancy for Perth CBD has dropped to 18.5 per cent in the six months to January 2019, down from 19.4 per cent. WA Executive Director Sandra Brewer, said, “When you consider there is no new office space officially in the pipeline for the Perth CBD after 2019, and business and economic sentiment is once again lifting, the signs for the office market and the broader industry are encouraging.”
Once again results show vacancy rates have declined over the past six months in the Canberra market, with the commercial leasing sector remaining confident that demand for office space will continue to grow. ACT Executive Director, Adina Cirson said, "Over the last six months to January 2019, Canberra’s overall vacancy rate decreased to 11 per cent from 12.4 per cent."
Hobart CBD’s office market vacancy rate held steady at 5.9 per cent, up marginally from 5.8 per cent over 12 months to January 2019. “The B, C and D Grade vacancy rates have all decreased with the increase in A Grade vacancy due to tenant relocations to outside market boundaries,” Tasmanian Executive Director, Brian Wightman said.
Northern Territory Executive Director, Ruth Palmer, said that while our vacancy rates show Darwin has dropped to 17.2 per cent from 21.6 per cent, we must note that this is purely due to the timing of the report. “This figure will change significantly again when the new Health building is completed and the current Health House plus a floor in Darwin Plaza become empty as the transition to the new Health building commences.