Demand for city office space grows

HOBART’S office vacancy rate remains among the lowest in the nation despite it being the only capital city CBD not to record a decline in the past year.

Only Melbourne and Sydney CBD, which are experiencing 10-year lows, had tighter markets than Hobart, according to the latest Australian Office Market Report.

Hobart’s office vacancy rate largely held steady, increasing by 0.1 per cent to 8.9 per cent in the year to January.

Tasmanian executive director of the Property Council, Brian Wightman, said the market had tightened significantly because of rental demand during the past three years.

“For Tasmania, it’s a very strong sign because with increased confidence in the economy, you’ll see increased investment,” he said.

“Education and health are always key industries within Tasmania and, further to that, the arts and cultural side has taken a big leap off the back of MONA.

“Landlords are looking for ways they can maximise their opportunities, particularly in the CBD office blocks, and that’s why we’re starting to see cafes on ground floors.”

Net demand for office space in Hobart has increased since January 2017, Property Council data shows.

Development in the Hobart CBD continues, with an extra 2562 sqm office space expected to be added to the market this year. The extra space is much needed, according to Tasmanian Chamber of Commerce and Industry CEO Michael Bailey, who said office vacancies had tightened as stock was taken up to meet demand for hotels and city accommodation.

“We are also seeing business growing in Tasmania [and] we’re seeing businesses that relocated their offices from Tasmania bringing them back again as well,” he said.

Mr Wightman said the health of Hobart’s office market was “in stark contrast” to the residential market, where he said a housing supply “crisis” was exacerbated by a lack of strategic planning and a decrease in private rental options available for University of Tasmania students.