Southport Central rush

THE vacancy rate at the threetower Southport Central complex more than halved over the past 18 months following a rush of sales and tenancies.

A surge in owner-occupiers taking up space in the Raptisbuilt project has helped to push the vacancy rate down from a high of 18.23 per cent in January, 2016, to 8.71 per cent by July this year.

Savills Gold Coast senior executive Doug Garvie, who sits on the Property Council’s subcommittee for Gold Coast office space, said the absorption rate had accelerated in the past 18 months.

He said many of the sales were to businesses providing professional services including medical, legal, finance, engineering, architecture and property firms.

“Everything I have sold this year has been to owner-occupiers,” he said. “Last year I sold one to an investor but the complex is now a majority owner occupied.”

Mr Garvie estimated owner-occupiers took up 70 per cent of the complex’s 440 strata-units across 32,768 sqm of office space.

“Four to five years ago it started to pick up – more and more owner-occupiers have bought in,” he said. “It suits owner-occupiers rather than investors because the rents are not high enough to lead to the yields investors search for.”

He said other factors were the low interest rate environment and the modern construction of the complex.

Mr Garvie said the strong run of sales had seen square metre rates lift from an average of $2800/sqm during the Global Financial Crisis to more than $3200/sqm today.

He said in some cases the rate had hit $4000/sqm and cited the sale of a 75 sqm office at tower 3 for $300,000 plus GST last year as an example.

Sales Mr Garvie negotiated this year included two units at tower one comprising a 123 sqm space on level six for $440,000 + GST ($3577/sqm) to a registered training organisation and a 70 sqm unit on level four for $215,000 + GST ($3071/sqm) to an insurance company.

The biggest recent deals for Southport Central included 1265 sqm of space sold to Golden Edge Homes between the start and middle of last year and 2060 sqm leased to the New York Film Academy earlier this year. Mr Garvie said the sheer size of Southport Central (greater than the entire 29,000 sqm Broadbeach office precinct) meant that it had a big effect on the overall vacancy rate in Southport.

That stood at 14 per cent for the six months to July.

Tower one of the $700 million Southport Central project was completed in 2006 and the final tower finished in 2010.

Original developer Raptis Group fell into financial difficulties in 2008 and receivers completed the project.