MELBOURNE’S Docklands has gone from strength to strength. In the six months to January 2010, the precinct leased almost 90,000 sqm of office space.
According to the Property Council of Australia’s Office Market Report, the Docklands vacancy rate decreased from 3.7% to 2.3% but despite the success, the Melbourne CBD office market vacancy rate rose from 4.8% to 6.6%.
Victorian executive director Jennifer Cunich said Docklands and the adjacent Spencer precinct were holding strong during tough times, showing the master planned community was developing nicely half way into its 25 year plan.
Cunich said the development has allowed for Melbourne to cope with increased demand for office space with net absorption for much of Melbourne located in the Docklands precinct.
The success of Docklands has come at the cost of Civic which recorded a negative net absorption of 25,294 sqm, Flagstaff (-9,410 sqm), North Eastern (-35,359 sqm), Western Core (-36,152 sqm).
Cunich pointed out that the vacancy rate is due to new supply totaling 134,452 sqm – almost three times the 15 year average.
The worst performing segment was Premium grade office, where vacancy rose from 4.3% to 10.6%. A grade remain unchanged at 4.5%, B grade rose from 5.2% to 8%, C grade from 5.2% to 7.5%. However vacancy for D grade stock fell from 5.1% to 3.5%.
Outside of the CBD, vacancy in Southbank increased and is now 11.1%. Demand of -11,574 sqm, the weakest on record, coupled with 10,610 sqm of supply were the cause of the increase.
Vacancy on St Kilda Road also increased to its highest level in over five years, from 8.9% to 11.3% due to negative demand. No new stock is planned for the St Kilda Road market in the short to medium term.
PropertyReview
