Towering drop-off in free office space
THE Surfers Paradise office market has come roaring back – declining to a vacancy rate below 15 per cent for the first time in almost a decade.
The vacancy rate for Surfers Paradise has dropped to 12 per cent in the Property Council of Australia’s latest Gold Coast office market report for the six-month period ending December 31 last year.
The last time the vacancy rate in the Glitter Strip was below 15 per cent was in December, 2008, when it reached 12.3 per cent.
The overall Gold Coast vacancy rate fell for the seventh year in a row to 10.6 per cent.
Property Council Gold Coast committee chair Tania Moore said a major cause of the fall in the vacancy rate in Surfers Paradise had been a concerted campaign by 50 Cavill Ave owner GDI Property Group to attract tenants to the corporate power tower.
“Because of its sheer size,
that building has a big impact on the vacancy rate,” she said.
Net absorption in Surfers Paradise was 3063sq m for the six-month period but only 1637sq m for the Gold Coast.
Ms Moore said the Gold Coast vacancy rate would have fallen further were it not for weak leasing activity during the second half of last year. “Transactional activity is generally at its peak during the September to December period,” she said.
“While inquiry levels were relatively good this did not convert to leases being finalised as occupiers chose to hold off making decisions and this was shown in the figures.”
However, she said, there had been a strong surge in activity during January with a number of companies motivated to secure premises.
Mr Moore said the supply of A-grade stock continued to tighten as the drift to quality office space continued.
“While there has not been any significant growth in rents over the last 12 months, we have seen incentive levels start to tighten,” she said.
“We expect negligible new supply for the next 18 to 24month period will ensure that vacancy levels continue to fall, driving rental growth and an uplift in property values.”
Property Council Queensland executive director Chris Mountford said it was an impressive result for the Gold Coast.
“Vacancy rates have now been falling on the Gold Coast for a year and a half, indicating growing strength in the local economy,” he said.
“The Gold Coast office market is now performing considerably stronger than the Brisbane CBD.”