The national office vacancy rate eased slightly in the past six months, falling to its lowest level since 2009.
According to the Property Council’s latest Office Market Report, despite a surge in supply during the past six months the nation’s office vacancy rate has fallen 0.1 per cent since January 2012 to 7.8 per cent.
“Australia’s multi-speed economy is driving office market fundamentals and shaping business confidence,” says Property Council chief executive, Peter Verwer.
“While demand for office space is a buoyant 50 per cent above the 20-year historical average, three quarters of net CBD absorption occurred in just Perth and Brisbane.”
“The hard economics of the resources boom is tellingly reflected in the relative performance of the nation’s office markets.”
The Sydney CBD recorded the sharpest six-month fall in vacancies, dropping from 9.7 per cent to 8.2 per cent. The Canberra market also delivered a slight decline in vacancies, from 10.3 per cent to 9.8 per cent.
However, in both cases, low levels of new supply combined with stock withdrawals had a bigger impact on the vacancy factor than strong demand.
Despite negative demand, the report found that Adelaide’s CBD also posted a vacancy decrease from 7.8 per cent to 7.7 per cent, due primarily to stock withdrawals.
Vacancies in all other CBD markets increased, but for different reasons.
Occupied stock in the Perth CBD grew by 12 per cent (net), posting record supply and record demand. In fact, net absorption was eight times higher than the city’s historical average. Nevertheless, the vacancy rate edged up from 3.3 percent to 4.2 per cent.
Vacancies in the Brisbane CBD also rose (from 6.2 per cent to 7.9 per cent) despite three years of above average demand.
The report also revealed that new supply will peak in the next six months and then fall away rapidly until 2015, after which another construction spike is due.
The report added that vacancies in Australia’s non-CBD markets fell marginally from 9.1 per cent to 9.0 per cent, reflecting a period of low supply and solid demand.