Published: October 20, 2019

Steady improvement in the Perth, Brisbane and Adelaide office markets has sent the national vacancy rate a full percentage point lower to 8.1 per cent in the past year.

Vacancy rates in the three resource sector-focused states tightened further over the third quarter, according to figures complied by JLL. The improving markets come even as investors step up their activity in those markets, including a run of more prominent deals in Brisbane, Perth and Adelaide recently.

JLL head of research in Australia Andrew Ballantyne said: “Adelaide is one of the office markets where sentiment has improved significantly over the past 12 months.

“Defence, aerospace, technology and health are all growth sectors of the Adelaide market and are having a positive impact on leasing enquiry and activity.”

The net take-up of space hit 7100sq m in the 2019 third quarter in Adelaide as firms including Boeing and BAE Systems expanded their footprints. Vacancy trended lower to 13.5 per cent. Vacancy in the prime grade sector is at 9.9 per cent.

As vacant space retreats, rents are rising in Adelaide. Prime gross effective rents have increased by 5.5 per cent over the past 12 months.

Meanwhile in Sydney, vacancy rose to 4.6 per cent, up from 4.1 per cent in the previous quarter. The uptick was due to backfill space becoming available through relocation activity into a new development.

JLL head of leasing Tim O’Connor said: “The Sydney CBD office market is a microcosm of the broader economy with expansion activity in the technology and flexible space sectors offset by some additional sublease space.”

Melbourne recorded 6000 square metres in net take-up of space over the quarter. Vacancy tightened slightly to 3.7 per cent. Within the prime grade category of office buildings, the vacancy rate has tightened to 2.1 per cent, the lowest since early 2008.

“The very low prime grade vacancy rate is a positive sign for the Melbourne CBD office market as the next wave of new developments complete in 2020 and 2021,” Mr O’Connor said.

“Some of the concerns around backfill space availability are over-stated and we are already seeing healthy levels of inquiry on these assets.”

Prime gross effective rents in Melbourne rose by 4.8 per cent over the past 12 months.

In Perth, the vacancy rate improved a full percentage point but is still high overall at 19.4 per cent. In Brisbane, the vacancy rate dipped moderately to 10.9 per cent.

Office squeeze as Brisbane, Adelaide and Perth pick up by Nick Lenaghan originally seen in the Financial Review, 17 October 2019. 

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