Free office space hits 10-year low

OFFICE vacancies on the Gold Coast are at a 10-year low, with population growth and Commonwealth Games investment boosting rents and making prime space scarce.

A new report from Knight Frank found limited new supply had seen vacancy rates continue to fall, with total vacancy at 10.6 per cent in January – down from 12.2 per cent a year earlier.

There is wide variance between local suburbs, with the rate in the tight Broadbeach market at just 6.6 per cent, while 13.2 per cent of Southport space is vacant.

The report, which drew data from the Property Council of Australia, found prime vacancy was at 10-year lows, plummeting to 8.9 per cent from 12.9 per cent the previous year.

Knight Frank Gold Coast joint managing director Tania Moore said the direction for the market would become clearer after the Commonwealth Games, but that signs were very positive.

“The start of 2018 has already been very strong following a softer end to 2017, and while some business may put off making decisions until after the Commonwealth Games, it will be business as usual from May onwards,” she said.

“The prospects for the future are solid. The Gold Coast economy is on an upswing with strong population growth, infrastructure development, domestic and offshore tourism and the Commonwealth Games injecting activity and confidence into the region. The maturation of the Gold Coast as a regional service centre will also continue in the medium term.

“We expected vacancy rates to keep falling over 2018 and 2019, and while rental growth has been modest across the Gold Coast as a whole, as more competition for tenancies builds rents will likely accelerate, particularly in the core areas.”

Ms Moore said the Com- monwealth Games would raise the profile of the Gold Coast, showcasing the city to a wider audience, and potentially attracting more industries.

“We are already seeing the emergence of the tech sector on the Gold Coast, with a few deals already completed including the London-based ETZ Technologies, which leased space in Oracle at Broadbeach last year.

“That industry is just one in which lifestyle for employees is becoming more important, a factor that is increasingly leading companies to consider office space on the Gold Coast rather than in a major CBD. For many businesses, being in a capital city isn’t a necessity due to the growing ability to work remotely,” she said.

Knight Frank’s senior director of research Jennelle Wilson said the supply of new office space across the core Gold Coast precincts of Southport, Bundall, Surfers Paradise, Broadbeach and Robina/Varsity Lakes had stalled over the past five years, with the current stock of 466,817sq m in line with the levels seen in 2012.

“While there was a level of overbuilding in 2009 and 2010, taking the vacancy rate beyond 20 per cent, the steady improvement in demand, particularly since 2014, has not been matched by a supply response,” she said.

THE START OF 2018 HAS ALREADY BEEN VERY STRONG TANIA MOORE