According to the Property Council’s latest Office Market Report, despite a surge in supply during the past six months the nation’s office vacancy rate has fallen 0.1 per cent since January 2012 to 7.8 per cent.
“Australia’s multi-speed economy is driving office market fundamentals and shaping business confidence,” says Property Council chief executive, Peter Verwer.
“While demand for office space is a buoyant 50 per cent above the 20-year historical average, three quarters of net CBD absorption occurred in just Perth and Brisbane.”
“The hard economics of the resources boom is tellingly reflected in the relative performance of the nation’s office markets.”
The Sydney CBD recorded the sharpest six-month fall in vacancies, dropping from 9.7 per cent to 8.2 per cent. The Canberra market also delivered a slight decline in vacancies, from 10.3 per cent to 9.8 per cent.
However, in both cases, low levels of new supply combined with stock withdrawals had a bigger impact on the vacancy factor than strong demand.
The report also revealed that new supply will peak in the next six months and then fall away rapidly until 2015, after which another construction spike is due.
The report added that vacancies in Australia’s non-CBD markets fell marginally from 9.1 per cent to 9.0 per cent, reflecting a period of low supply and solid demand.
Alex Hezari, director of Taylor Nicholas Hills commented “We can see a similar trend in Norwest Business Park and fringe commercial pockets of the Hills district.