RENTAL INCENTIVES DIP AS MARKET IMPROVES
New projects are capitalising on strong demand for A-grade office space, as vacancy rates on the Gold Coast head toward below 10 per cent
LANDLORDS are cutting back on rental incentives as the office market continues to show signs of improvement.
The latest Metro Office report from Colliers tips an increase in the volume of sales this year thanks to strong market conditions and yields of between 7 and 8 per cent.
Colliers International’s Gold Coast director of investment sales James Crawford said there was a limited number of office building sales last year.
They included the Eye Centre at 2 Short St, Southport, which sold to an Australian Unity fund for $17.5 million and 140 Bundall Rd, Bundall, which sold to Zupp Property Group for $7.05 million.
“This year is ripe for transaction activity thanks to the strong employment market and Gold Coast vacancy rates heading toward below 10 per cent,” Mr Crawford said.
“We anticipate new projects to perform well given there is limited opportunities for tenants seeking Agrade office accommodation.”
Those new projects are concentrated in Robina, although there is a new office building planned for the Southport CBD.
The Robina projects comprise Alceon’s Acuity Business Park, set to deliver 15,000sq m of space across three buildings, and a 5100sq m project mooted by Robina Land Corporation for 197 Robina Town Centre Drive. The projects are capitalising on strong demand for Agrade space, which in the latest Property Council office market report saw its vacancy rate shrink to 11.9 per cent.
Colliers executive Craig Marshall said the planned projects will provide medical and professional groups with a higher standard of office accommodation than is currently available, including excellent working amenity, mobile technology and proximity to transport links.
Colliers executive Bede Blatchford said the improved market conditions can be seen in the average rental incentives level.
“The average rental incentives sit at 12 per cent as of last month compared to the four-year average of 15.4 per cent,” he said.
“We anticipate that rents will hold firm over the second half of this year as a fall in incentives usually precedes a future increase in rents.”