Canberra’s office market continues to experience its lowest vacancy rates for almost 15 years with vacancy remaining static at 2.1% since January 2006, according to the Property Council of Australia.
Property Council ACT executive director Catherine Carter said there has been no movement of major tenants in existing buildings over the six months to July.
“Vacancy rates in Canberra are so tight that there is effectively nowhere for substantial tenants to move to,” Ms Carter said. “Over the period, all space that was added was immediately taken up,” Carter said
Carter reports space is extremely tight in all areas of Canberra’s office market, particularly the A Grade segment.
“Both Civic and Non-Civic markets posted positive net absorption for the period. Civic’s vacancy rate dropped by 1.1% to 1.5% driven by demand and lack of supply,” the Property Council report found.
The Property Council found that net absorption in Civic was 4691 sqm, however, despite positive net absorption of 9844 sqm over the period, Non-Civic market vacancy increased marginally by 0.3% to 2.3%. This result was driven by the addition of 14,374 sqm over the period.
According to the Property Council, a total of 55,161 sqm of stock is due to enter the market in the last half of 2006.
Of this, 81.8% has been pre-committed, with the balance predominantly under offer with approximately 215,000 sqm due to come on-line in 2007.
“This represents an increase in additional stock to the market of 13.3% over the market’s current size,” Carter added.
“Given the strong net absorption in the Canberra market, and the lack of available space, the market should readily absorb the new 2006 supply.
“Looking forward to 2008 and beyond, it is expected that a further 34,000 sqm will enter the market, with a total of 105,259 sqm office in mooted projects.”
Carter sad that due to the highly intense demand from Commonwealth Government departments and agencies currently being experienced in the Canberra office market, this space is likely to be taken up readily. However, this is likely to cause a reshuffling of tenants in the medium term, as tenants trade up to higher quality space.
“The Property Council remains firmly of the view that additional commercial sites should be released in Civic and the other Town Centres on a regular basis over the next 5 years,” Carter concluded.
By Kathryn O’Meara
Key market indicators, Canberra (aggregate)
Grade | Vacancy, July 06 (%) | Vacancy, Jan 06 (%) | Net absorption, 6 months to July 06 (sqm) | Net absorption, 12 months to July 06 (sqm) |
A | 1.8 | 0.6 | -354 | 7528 |
B | 0.8 | 1.8 | 15,001 | 21,598 |
C | 1.4 | 1.7 | 1208 | 20,742 |
D | 20.4 | 18.5 | -1320 | -7160 |
Total | 2.1 | 2.1 | 14,535 | 42,708 |