A-grade space in demand

PROPERTY figures say the outlook for the Coast office market remains solid despite the vacancy rate improving less than 1 per cent in the latest Property Council report.

The rate dropped from 12.2 per cent to 11.3 per cent for the six months to July, a fall largely attributed to the withdrawal of 8867sq m of office space from the market for refurbishment.

The net absorption rate – the difference between office space vacated and leased – was just 164sq m compared to 10,088sq m for the six months to January.

However, in a positive sign for the market, the take-up of A-grade office space was strong at 5064sq m.

Property Council Gold Coast committee chair Tania Moore said the move towards A-grade space continued a trend visible for the past five years.

“Accessibility and amenities continue to be strong drivers for occupiers, which is why Broadbeach and Robina/Varsity Lakes have been standout performers for the past few years,” Ms Moore said.

“Major infrastructure upgrades such as the six-lane road widening of Bundall Rd has had a positive impact on demand in this location.”

Surfers Paradise had the sharpest fall in its vacancy rate of the five business centres, dropping from 18.4 per cent to 15.1 per cent, following an increase in leasing at the 50 Cavill Ave tower.

Bundall and Broadbeach were the other strong performers with the latter’s vacancy rate dipping from 10.8 per cent to 8.7 per cent and the former falling from 14.1 per cent to 11.5 per cent.

Ms Moore said she expected the vacancy rate to fall further due to a lack of new supply, resulting in benefits to landlords from rent increases and a reduction in incentives.

Colliers International research manager Helen Swanson predicted the vacancy rate would fall to about 10 per cent by July next year.

“Good demand recently experienced across the Gold Coast office precincts should continue to strengthen the rental market,” she said.

CBRE Gold Coast associate director Nick Selbie was more bullish.

He said with limited new supply on the horizon “a sub-10 per cent vacancy level is foreseeable by the end of the year”.