CBD & Fringe Office Leasing “vacancy rates are at their lowest since January 2009”

The Property Council of Australia (PCA) have released some interesting information about the busy state of activity in the market.

I can say – I agree! Some days  in the office it’s so busy we say – “what recession?”. Some properties I am leasing out now in 2012 have been available for 6mth and even 2yrs. 

Understandably people on the lookout for a property say ‘there’s heaps around‘ (believe me, I’m in the game and know 😉 ) but when it comes to it, there isn’t really all that much when people have a few key requirements that just aren’t able to be matched up to what’s available.

Contact me with your requirement or for a no-commitment discussion: 0417 000 040 or thor@thorharrison.com.au

Here’s the PCA article in full:

Office markets defy doomsayers

Published: 02 Feb 2012 Author: Property Council Source: Property Council of Australia

Australia’s office market has shrugged off gloom about the wider economy, recording a decrease in vacancy to its lowest level in three years, according to research from the Property Council of Australia.

The Property Council’s latest Office Market Report shows vacancy dropped significantly in the six months to January 2012, from 9.0 percent to 7.9 percent, the lowest since January 2009.

Total vacancy graph OMR Jan 2012

Key findings of the report are:

  • Vacancy – The improvement in vacancies encompassed both CBD and suburban markets. The CBD vacancy rate dropped from 8.3 percent to 7.4 percent, non-CBDs from 10.5 percent to 9.1 percent, over six months.
  • Net absorption – Overall net absorption, the most reliable indicator of business space demand, was 20 percent higher than the historical norm at around 240,000 sqm.
  • Recent supply – Over six months, supply was less than 200,000 sqm, about one-third below the long-term average.“Despite the global gloom, negative business and consumer sentiment, the halting recovery from natural disasters and a tetchy political environment, the demand for space increased and vacancies fell,” says Property Council Chief Executive, Peter Verwer. 
  • Withdrawals – There was a 50 percent increase in withdrawals of commercial space, to 225,000 sqm, over the six months to January 2012 (compared to the long-term average).“The figures signal the start of a new wave of major refurbishment activity,” Mr Verwer says. “Property owners see the opportunity to improve the competitiveness of older buildings in time for an uptick in demand driven by stronger economic fundamentals,” Mr Verwer says. 
  • Markets – Vacancies decreased in all CBD markets, except Sydney, Hobart and Darwin.“The GFC caused all CBD markets to nose-dive simultaneously. However, each city is now experiencing a unique and varied recovery trajectory based on the mix of business activities it services,” Mr Verwer says.“Brisbane and Perth, in particular, have recorded a spectacular lift in demand, and a sharp drop in vacancies. Net absorption in the Perth CBD was five times the historical average.”
  • Future supply – Projected 2012 supply levels are around one-third higher than average, at 800,000 sqm, 65 percent of which is pre-committed.The CBD markets with relatively modest supply pipelines for the next 24 months are Sydney (3 percent of current stock), Hobart (2.7 percent) and Darwin (1.2 percent).The markets with pipelines larger than 5 percent of current stock are Perth (12.1 percent), Adelaide (10.3 percent), Canberra (7.3 percent), Melbourne (7.1 percent) and Brisbane (6.3 percent).“Most CBDs, particularly Melbourne and Canberra, will need to absorb a larger-than-average wave of supply to maintain current rates of vacancy,” Mr Verwer says. “Apart from the Brisbane Fringe and West Perth, supply pipelines for Australia’s suburban markets are extremely modest.”

National OMR first table Jan 2012

For further comment:

Peter Verwer
CEO, Property Council of Australia
Ph: 0407 463 842

Headline comments:

  • Australia’s office market vacancy decreased over the six months to January 2012 to its lowest level in 3 years
  • Net absorption and withdrawals were above the historical levels
  • The total CBD market vacancy decreased over the period
  • All CBD office markets covered by the survey experienced vacancy decreases from the last period, with the exception of Sydney CBD, Hobart CBD and Darwin
  • The total non-CBD market vacancy decreased over the period
  • The non-CBD market experienced above average levels of net absorption and withdrawals

National second table OMR Jan 2012

Vacancy & supply analysis:

  • Australian office market vacancy decreased from 9.0 percent to 7.9 percent, the lowest in 3 years
  • Net absorption was 239,184 sqm over the six months to January 2012. This result is above the 20-year historic average (194,980 sqm)
  • 199,304 sqm of space was added over the six months to January 2012. The 20-year historic average is 296,466 sqm
  • A total of 225,766 sqm was withdrawn over the period which is more than one and a half times the 20-year historic average of 146,455 sqm
  • By net absorption, the best performing markets were the Brisbane CBD, Perth CBD and Canberra

CBD markets:

  • Vacancy for the total Australian CBD office market decreased from 8.3 percent to 7.4 percent, the lowest since July 2009
  • All CBD office markets covered by the survey experienced vacancy decreases from the last period, with the exception of Sydney CBD, Hobart CBD and Darwin
  • By vacancy, the top 2 CBD markets are Perth (3.3 percent) and Melbourne (5.3 percent)
    Net absorption was 142,041 sqm. The 20-year historic average of 115,386 sqm
  • Over the 6 months to January 2012, the Perth CBD posted the highest demand rate of all CBD markets surveyed of 3.2 percent. The demand rate is the amount space absorbed relative to the size of the market
  • A total of 154,561 sqm of stock was added to CBD markets over the period. This is less than the 20-year historic average of 218,273 sqm
  • 169,280 sqm was withdrawn, almost one and a half times the 20-year average of 115,853 sqm

Non-CBD markets:

  • Vacancy for the total Australian non-CBD market decreased from 10.5 percent to 9.1 percent, the lowest in 3 years
  • Net absorption was 97,142 sqm. The 20-year historic average is 79,594 sqm
  • 44,743 sqm of stock was added to non-CBD markets over the period. The 20-year average is 78,192 sqm
  • 56,486 sqm of stock was withdrawn over the period. The 20-year historic average is 30,602 sqm
  • By vacancy, the top 3 non-CBD markets are East Melbourne (1.6 percent), West Perth (4.4 percent) and Southbank (6.4 percent)
  • 5 of the 18 non-CBD markets surveyed in January 2012 Office Market Report have vacancy of above 10 percent

Future supply – total:

  • The 20-year average annual supply of space to the total Australian market is 600,322 sqm
  • A total of 800,367 sqm of stock is due to be added in 2012 which is higher than the historic average
  • In 2013 a further 410,900 sqm is due to come on-line around Australia, followed by 869,944 sqm in 2014+
  • A total of 1,494,440 sqm is mooted

Future supply – CBD markets:

  • The 20-year average annual supply of space to the total CBD markets is 442,319 sqm
  • A total of 651,992 sqm of stock is due to be added to CBD markets in 2012 which is higher than the historic average
  • In 2013 a further 372,598 sqm is due to come online, followed by 634,899 sqm in 2014+
  • A total of 937,388 sqm is mooted

Future supply – non-CBD markets:

  • The 20-year average annual supply of space to the total non-CBD markets is 158,004 sqm
  • A total of 148,375 sqm of stock is due to be added to non-CBD markets in 2012 which is lower than the historic average
  • In 2013 a further 38,302 sqm is due to come on-line, followed by 235,045 sqm in 2014+
  • A total of 557,052 sqm is mooted

Key market indicators, all Australian office markets (aggregate), Jan 2012

Vacancy,
Jan 12 (%)
Vacancy,
Jul 11 (%)
Net absorption, 6 months to
Jan 12 (sqm)
Net absorption, 12 months to Jan 12 (sqm)
7.9  9.0  239,184 458,542

 

Best performing markets, by net absorption (6 months to Jan 2012)

Market Net absorption (sqm), 6 months to Jan 2012
Brisbane CBD 54,032
Perth CBD 46,968
Canberra 36,552

 

Vacancy, Australian CBD markets, Jan 2012

Market Vacancy rate,
Jan 12 (%)
Vacancy rate,
Jul 11 (%)
Vacancy rate,
Jan 11 (%)
Perth CBD 3.3 7.8 10.2
Melbourne CBD 5.3 5.8 6.6
Hobart CBD 5.5 n.a. 4.6
Brisbane CBD 6.2 7.4 9.4
Adelaide Core 7.2 7.3 7.5
Darwin CBD 9.1 n.a. 7.2
Sydney CBD 9.6 9.3 8.3
Canberra 10.6 13.3 13.4
Total (all CBD markets): 7.4 8.3 8.7

 

Vacancy, Australian non-CBD markets, Jan 2012

Market Vacancy rate,
Jan 12 (%)
Vacancy rate,
Jul 11 (%)
Vacancy rate,
Jan 11 (%)
East Melbourne 1.6 2.5 5.4
West Perth 4.4 5.4 4.9
Southbank 6.4 5.7 7.0
Wollongong 6.5 n.a. 9.0
Adelaide Fringe 6.6 8.5 8.9
North Sydney 7.2 9.2 10.5
Chermside 7.4 5.7 6.5
Brisbane Fringe 7.6 8.8 9.5
Newcastle 7.9 n.a. 11.5
Upper Mt Gravatt & Macgregor 8.0 12.5 14.8
North Ryde 8.2 9.8 9.9
Parramatta 9.1 9.3 9.6
Adelaide Frame 9.6 9.6 11.4
Chatswood 10.7 17.0 18.0
St Kilda Road 10.8 13.4 14.0
Crows Nest/St Leonards 13.0 12.5 15.0
Sunshine Coast 13.6 n.a. 14.4
Gold Coast 21.8 22.4 23.9
Total (all non-CBD markets): 9.1 10.5 11.4

 

For full analysis and coverage, visit the dedicated website:www.officemarketreport.com.au

 

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