Office vacancy hits lowest mark since 2012

Melbourne’s offices are well occupied.
Melbourne’s offices are well occupied.

The amount of empty office space around the country has reached the lowest levels in almost six years despite a modest slowing in the rate of absorption.

A total of 29,300sqm of space was taken up over the first quarter of the year, resulting in the national office vacancy rate falling to 8.3%.

Vacancies dropped 1.6 percentage points (355,500sqm) over the past 12 months to levels last seen in mid-2012. All capitals cities recorded improved or steady vacancy rates compared with last quarter, with JLL’s head of research Australia Andrew Ballantyne saying improved employment is behind the tightening office market.

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“The most important lead indicator for the office sector is the labour market and employment growth, which has remained above trend over the past 12 months,” Ballantyne says.

“Employment growth typically precipitates leasing inquiry and activity. Sydney and Melbourne continue to see positive levels of inquiry, but the Perth CBD is the market to focus on in 2019 as the leasing market recovery gathered further momentum over 1Q19.”

Sydney is now tied with Melbourne for the tightest vacancy rate in the country at 3.7% following an improvement of 0.4% over the quarter. It is the lowest level in the Sydney CBD since 1989. The normal vacancy rate hierarchy in the city has also been re-established, says JLL. Premium vacancy levels are at 3.3%, below that of A- grade (3.7%) and secondary-grade (3.9%) stock.

Melbourne’s CBD recorded 21,900sqm of net absorption, ahead of 344,600sqm of space coming on line over the remainder of 2019 and 2020.

Vacancy rates in Brisbane experienced the highest absorption in the first quarter of the year, finishing with a vacancy of 12.7%. The elevated rate in Perth improved by 0.4% to 20.7% as the employment market began to recover. Adelaide and Canberra remained steady.

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