Net tenant demand grew by only 0.1 per cent for CBDs and 0.4 percent for non-CBDs in the six months to July 2019, compared with 0.7 percent and 0.2 per cent in the previous period.
“Office markets provide a unique window into business activity and sentiment, and it’s one that shows only minimal pick-up in demand for office space around the country,” said Ken Morrison, Chief Executive of the Property Council.
“The July 2019 results show that while office vacancy has tightened slightly overall, this has been mostly driven by withdrawal of stock from the market rather than tenant demand. In fact, net tenant demand for CBD office space grew by just 0.1 per cent over the six months, its lowest growth in over four years, a clear indicator of a softening economy. Looking behind the headline vacancy rate provides a deeper understanding of what is happening in office markets and the economy more generally,” he added.
The latest Property Council Office Market Report has shown the lowest vacancy rate for Sydney CBD since January 2008, demonstrating the continued growth and strength of the commercial office market in Sydney.
The Sydney CBD vacancy rate dropped from 4.1 percent to 3.7 per cent in the six months to July 2019 due to withdrawal of stock from the market and is the second lowest capital city vacancy rate in the country just behind Melbourne CBD at 3.3 per cent.
Melbourne has recorded a CBD vacancy rate of 3.3 per cent – the lowest CBD vacancy rate in the nation.A combination of demand, some stock withdrawal and steady population growth are driving low vacancy rates in the state’s capital.
The Brisbane CBD vacancy rate has dropped from 12.9% to 11.9% over the last six months. Vacancy in the Brisbane Fringe fell from 15.7% to 13.8% over the same period.
The Adelaide CBD office vacancy rate has dropped for the fifth consecutive period. The latest Office Market Report reveals a drop from 14.2 to 12.8 per cent for the city, while Fringe vacancy has increased from 12.6 to 13.1 per cent in the six months to July 2019.
The overall Perth CBD vacancy rate for the six months to July 2019 was 18.4 per cent, marginally lower than the 18.5 per cent recorded in January, due to 15,923sqm of net absorption, the best result since July 2015’s 16.6 per cent vacancy.
A fall in demand for office space on the Gold Coast has seen vacancy rates increase across the city over the final half of 2019.According to the report over the first six months of 2019, Gold Coast office vacancy rose from 11.6 to 12.9 percent due to reduced tenant demand.