Offices leading way
PROPERTY figures are tipping the Gold Coast office market to be the standout performer in the second half of the year following a string of sales and leasing deals.
Recent sales include 183 Varsity Pde, Varsity Lakes for $11.8 million, 69 Laver Drive, Robina for $7.6 million and 12 Ferry St, Nerang for $3.625 million.
Major leasing deals were struck for the National Disability Insurance Agency, which took out 2796sq m of floorspace at The Rocket in Robina and insurer Allianz, which has moved into 2100sq m at Oasis Shopping Centre in Broadbeach.
The vacancy rate in January was 12.2 per cent, dropping from 14.3 per cent 12 months earlier.
Knight Frank Gold Coast joint managing director Mark Witheriff said he expects the rate to fall further this year.
“We think it will drop below 10 per cent by December,” he said.
“There have been a number of leasing deals. Robina/ Varsity Lakes is a very strong market.
“The vacancy rate is about 6 per cent, which is almost a full shop.”
Mr Witheriff said the improvement was driven by established businesses shifting to larger premises and a lack of new supply.
“There has not been a new office building since The Rocket in 2009 and there is only one building that could be constructed in the next 12 months – The Base at Robina,” he said.
Mr Witheriff said southern investors including syndicates had taken note of the strong market, leading to a strong run of sales.
“The market for office buildings has been the most active since 2005/2006 with half-a-dozen transactions in the past six months. I’m aware of three others in due diligence.”
Mr Witheriff said the reduced vacancy rate will lead to upward pressure on rents.
“We’ve started to see the beginning of that rental growth. I see that sector as the best performer for the next six months,” he said.
Colliers International Gold Coast metro sales director James Crawford agreed.
“The lack of supply coming to the office market together with strong demand will lead to firming of rents and reduced incentives,” Mr Crawford said.
A report from Colliers research manager Helen Swanson points towards investors looking to purchase prime office grade stock finding a highly favourable leasing environment compared to two years ago.
Mr Crawford said demand was not limited to office space for the first six months of the year but spread evenly across tenanted properties.
“The market is strong across the board for leased investment properties. Anything with a quality tenant profile is highly sought after. People want an income-producing asset in a low-interest rate environment,” he said.