Office vacancy rate tipped to tighten in the New Year

THE number of vacant office spaces throughout Toowoomba is tipped to lessen in the New Year on the back of restrictions generated by the Hayne Royal Commission.

Banks have already tightened their lending criteria in readiness for the February release of the final report into the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industries.

Industry experts believe the report will recommend further guidelines to assessing commercial loan applications, making it more difficult for owner-occupants to purchase in the local office market.

As a result, LJ Hooker Commercial Toowoomba’s Scott Playle (pictured) anticipated a flight to renting in the following six to 12 months.

"With interest rates at a record low for so long, we’ve seen a trend of office tenants making the shift to owner-occupancy," Mr Playle said.

"But, we’ve already seen access to lending become more difficult, and all suggestions are that this will only get tougher once the Commission’s final report is tabled.

"For that reason, I think the local office market is at the bottom of the vacancy cycle, now."

Mr Playle said Toowoomba’s office market was challenged by a large amount of vacant stock up to 300sq m in size.

But, while he tipped the vacancy rate to tighten as tenants were restricted to the rental market, he didn’t foresee any improvements in rates being paid.

Currently, good quality stock is commanding rents of approximately $300-$350 per square metre (net) while secondary stock was fetching sub-$275 per square metre.

"I don’t see any real growth in the market in the short to medium-term – there’s still too much stock to be absorbed," he said.

"But, landlords shouldn’t develop a false sense of security by the outlook; if their office space is outdated and unappealing, they will still struggle to find a tenant, especially a quality tenant that’s willing to take on a long-term lease."

To find out more about office leasing opportunities throughout Toowoomba, contact Mr Playle on 0417 779 434.