About the Office Market Report

METHODOLOGY

Office Market Database

The Property Council has compiled a comprehensive inventory of all useable office space in over 25 office markets across Australia.

The database includes details of building names, completion dates, quality grades, net lettable areas (NLA), ownership, and building vacancy on a direct and sublease basis.

This inventory is used to make calculations of total stock, vacancy, supply, withdrawals and absorption.

Every six months the Property Council updates this database as follows:

Distribute database to leasing agents, property managers and building owners active in their respective market to update vacancy and other building details;

Review and confirm revised database at the Leasing Agents’ Committee Meeting;

Conduct further checks and inquiries on an individual basis for properties not covered by steps 1 and 2;

Double check finalised database with leasing agents, property managers and building owners in their respective markets.

NB: Darwin CBD, Hobart CBD, Newcastle, Wollongong, Sunshine Coast and Bondi Junction are updated every 12 months in the January report only.

Inclusion of Buildings

The Property Council’s Office Market Report tracks all commercial buildings within defined market boundaries. CBD markets exclude any property with an NLA of less than 1,000sqm, while metro regions exclude any property with an NLA of less than 500sqm.

Absorption Calculation

The Net Absorption calculation was revised in 2004 so as to more accurately reflect disaggregation of commercial stock by grade. Net Absorption measures the change in occupied space between two survey periods. It takes into account losses from total stock due to demolition, refurbishment, change of use or change in a building’s grade.

The Formula used to calculate Net Absorption is:

Net Absorption = Occupied Stock at the end of the survey period

LESS Occupied Stock at the beginning of the survey period.

Occupied Stock = Total marketable stock

LESS Total vacant stock

Vacancy Factor

The vacancy factor is an expression of total vacant space as a percentage of stock.

Office Construction and Refurbishment

Statistics relating to the projected supply of office accommodation were collated from a survey of owners, developers, agents and architects conducted during the survey period. A broad range of information was sought including details on:

The owner, developer, intended property type and architect;

Stage development;

Lettable areas (office, retail, residential, etc);

Typical floor areas;

Completion date and construction time;

Number of car bays;

Precommitted space

Space planned for owner occupation

Demolition statistics

Once this information has been compiled it is vetted by a committee of industry specialists who:

Assess the viability and timing of each project;

Designate each project as either likely or mooted; and

Review project details (ownership, composition, pre-commitment etc.).

Classification of Office Space

All marketable space has been assigned a quality grade. The Property Council has classified all buildings in its database using the Guide to Office Building Quality 2012. These classifications summarise factors which influence a building’s ability to attract occupants and sustain rental performance. They provide a general guide to the evaluation of space, taking into account the particular characteristics of each building in relation to the market. The ‘Quality Grade Matrix’ previously employed for this task was withdrawn from public circulation in July 2003.

The Guide to Office Building Quality 2012 provides two voluntary tools for classifying office building quality: a design specification for new office buildings; and an easy to use matrix for existing buildings.

The Guide to Office Building Quality 2012 can be ordered from the Property Council website here.

Please note, the Property Council produces quality grades solely to provide disaggregated office market statistics – the Property Council does not release the grades of individual buildings to the market.

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DEFINITIONS

Total Marketable Stock

‘Marketable stock’ is the total amount of owner occupied and leasable office space in a designated commercial district, excluding areas in buildings not available for occupation at the time of survey (withdrawn for refurbishment, still under construction or unable to be occupied). The minimum standard for inclusion on the survey is commercially acceptable office space, with or without central air conditioning.

NLA – Net Lettable Area

Net Lettable Area is defined in accordance with the Property Council’s Method of Measurement. It covers only the net office component of buildings.

Refurbishment

Refurbishment is the upgrading of a buildings fabric and services with the aim of enhancing its ability to compete effectively for tenants, improve rental growth, and maximise market value. In most cases, this involves the modernisation of services, such as air conditioning, lifts, electrical load capacity, and some cosmetic work to facades and interiors.

The Property Council distinguishes between two types of refurbishment:

1. Full Refurbishment occurs where a building is wholly vacated and withdrawn from stock for the purpose of refurbishment.

2. Partial Refurbishment occurs where a building is partially vacated and withdrawn from stock for the purpose of refurbishment.

Vacant Space

Vacant space is defined as areas within buildings available for occupation at the time of survey. Space which is empty but unable to be occupied is not included in the calculation of vacancies and marketable stock. Space under work for make good or fit out is considered occupiable.

Vacant space is designated as being available either on a direct or sublease basis.

The definition of vacant space applies equally to each category.

Completion Date

Issue of a Certificate of Occupancy is the principal guide to a building’s completion date. However, the Property Council also takes account of physical or legal obstacles when occupying new buildings.

Effective completion hinges on a lessee’s ability to occupy the new premises.

‘Musical Chairs’ Effect

For reports of this nature to reflect real market conditions, it is important to take account of the so called ‘musical chairs’ effect. Where a new building is considered complete, pre-committed space is considered occupied and uncommitted space is considered vacant. Space currently occupied by tenants relocating to new premises is deemed vacant, except where such space is:

Itself committed

To be withdrawn for refurbishment; or

Will otherwise not be able to be occupied.

The Property Council takes this approach to ensure all vacancy and absorption calculations are symmetrical.

Pre-commitment

A contractual commitment to occupy office space currently under construction, prior to a building’s completion or refurbishment.

Every attempt is made to ensure pre-commitment figures in this report represent firm commitments.

Under Construction

Buildings which are currently being developed. A building is deemed to be under construction when development proceeds beyond the laying of footings.

Likely Projects

Development Projects which have a high probability of proceeding and whereby the office space is expected to be supplied to the market by a nominated date.

Mooted Projects

Projects which cannot be considered likely to be completed by a nominated date at the time of publication, however they are anticipated to commence during the medium term.

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FREQUENTLY ASKED QUESTIONS

Why do the Property Council of Australia’s market statistics sometimes vary from those released by other research houses?

Due to different research methodologies, the Property Council’s office market survey may vary from studies conducted by other research houses.

The Property Council’s methodology is an audit of market conditions at a specific point in time whereas alternative methodologies attempt to estimate expected market dynamics.

Can I find out a particular building’s quality grade?

The Property Council of Australia does not provide grading data for individual buildings.

Can I use/quote the data contained in the Office Market Report for research purposes?

The Property Council of Australia holds the copyright to the Office Market Report. Data may be used by permission from the Property Council of Australia on 02 9033 1900.

What are the boundaries defined by each office market?

The boundaries of each office market are generally derived from Cityscope Publications, and can be viewed here.

Why is the data the same for January and July periods of the Darwin, Hobart, Wollongong, Newcastle and Sunshine Coast office markets?

Due to their size, data for these markets are only updated once a year. The figures displayed in the July period are carried over the from the January survey.  

Why is the data for some of the markets not published?

Some markets/locales comprise only a handful of buildings. Publishing details for individual buildings breaches the Property Council of Australia’s confidentiality policy.

Does the Australian Office Market Report come in hard copy?

No, the report is only available in Excel format.

Please note: all Mac users should contact the Property Council of Australia before ordering.

When I use the PRINT buttons, why are the tables/graphs not centered on the page?

Each table/graph has been formatted to print on a 1024 x 768 sized screen. You may alter the layout by adjusting the Page Setup or Print Area in Excel.

Why does the total stock for all markets not equal the total stock for Australia?

The Australian stock does not include Brisbane Airport and Bondi Junction in the Office Market Report and will not contribute to the Australian total.

Why has there been a change to the amount of stock for each quality grade in Darwin CBD?

The Property Council of Australia conducted a re-grade of Darwin CBD, resulting in a change to the stock size of each grade.

Why does the total stock found in the Withdrawal Details tab not equal the total withdrawn stock for each market?

Withdrawn stock tabled within Withdrawal Details does not include 'Other Withdrawal' stock. Total stock found in the Withdrawal Details tab should equal the total withdrawn stock for each market less 'Other Withdrawal' stock.

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