It’s been a difficult few years for the office markets in Australia. Lockdowns and working from home mandates resulted in office occupiers shutting their doors and reducing their space requirements, impacting vacancies and market fundamentals. As we move through the post-pandemic era there have been some office markets which have rebounded better than others. Major CBD markets such as Sydney and Melbourne have been hampered by a slow uptake of staff returning to work, leaving businesses grappling with uncertainty surrounding the future of their office accommodation. While markets in Queensland and Western Australia, who endured differing levels of lockdown and enjoyed strong population gains, have had some pleasing results.
The Property Council Office Market Report has highlighted these trends with Brisbane fringe and Brisbane CBD recording the greatest level of take up over the last year. Brisbane CBD has recorded 87,351sqm of net absorption over the last 12 months, While vacancy still trends high at 12.9 per cent, it continues to outperform Melbourne CBD which has grown vacancy to 13.8 per cent. Across the non-CBD markets, Brisbane fringe is leading the charge, with over 63,000sqm of absorption during 2022, where supply levels have also increased.
The shining stars for Queensland, however, have been the coastal markets. Enjoying more positive demand results over the last year, vacancies for the Gold Coast and Sunshine Coast are 6.0 per cent and 4.0 per cent respectively – some of the lowest in the country. While these are smaller markets, the ongoing uptake of stock and enquiry levels to relocate, expand and grow new businesses has been outstanding, capitalising on the interstate migration enjoyed across the region. With limited new stock and prime vacancies tight, expectations surrounding incentives and rental rates differ from most other office markets in Australia.
Also benefiting from population growth, Western Australia was hampered by high vacancies prior to COVID-19, however, their recovery has been one to watch. West Perth is showcasing quality results with more than 21,000sqm of demand, reducing vacancies to its lowest rate in seven years. While vacancies remain high in Perth CBD, ongoing new supply additions have been offset somewhat by the continual positive take up over the last couple of years.
Across Sydney the non-CBD markets have had mixed results; the North Shore markets including North Sydney, Crows Nest/St Leonards, Chatswood and Macquarie Park have endured many years of high or growing vacancy rates. The attractive leasing options available within the CBD successfully poached space users across the harbour. However, Parramatta continues to be a strong performer for the state despite the high level of supply additions. Quality offerings and its geographic location in the centre of Sydney, and well serviced by public transport all work in its favour. After many years of tight occupancy, new, uncommitted stock has entered the market and vacancies have ballooned out to 18.1 per cent. Encouragingly, however, is the consecutive years of positive take up which gives confidence that the market can “catch up” and regain its number one non-CBD office position.
