SURFERS PICKS UP ITS GAME AS OFFICE MARKET TIGHTENS
Written on the 5 February 2016
FIVE years of positive uptake has helped Gold Coast office vacancies fall further over the past year, with Surfers Paradise finally showing significant improvement for the first time in years.
Net absorption in the 12 months to the end of January totalled 7816sqm, bringing the total uptake since 2011 to almost 52,000sqm.
In that time office vacancies have fallen from a peak of 24.1 per cent to 13.6 per cent. The latest vacancy figure compares with 15.2 per cent a year ago and 14.8 per cent in mid-2015.
However, Surfers Paradise has shown the biggest turnaround after posting a shock 29.9 per cent vacancy rate mid-year. The tourism hub has readjusted to 22.6 per cent thanks in part to a concerted leasing campaign for 50 Cavill Avenue by receivers to the property.
The 50 Cavill tower was bought late last year by Sydney-based GDI Property Group for $48.7 million with plans to upgrade the property and push harder to lift occupancy.
CBRE's associate director of office services Nick Selbie says the Gold Coast office market currently has about 64,300sqm of office space remaining for lease, the lowest level since mid-2008.
"While the Queensland state economy is facing headwinds at present, business conditions on the Gold Coast have strengthened with several key drivers providing support, particularly to office occupiers," says Selbie.
"This includes the first stage of the Gold Coast light rail and general planning and development in the lead up to the Commonwealth Games.
"Development sites continue to be sought after, particularly for residential projects, and office space demand from development and associated companies has been strong."
Net take-up over the year was evenly split between prime and secondary stock at 3995sqm and 3821sqm respectively.
"There was little net change to stock during 2015 with the addition of City Pods 3 and 4 in Robina (1400sqm) offset by a small amount of stock withdrawal in Southport," says Selbie.
"Proposed new development remains subject to pre-commitment with the market not yet at a level where speculative development can be supported."
The Property Council's Queensland executive director Chris Mountford expects solid market conditions on the Gold Coast to continue in the lead-up to the Commonwealth Games.
Property Council data shows that all Gold Coast office precincts, except for Southport, experienced positive demand in 2015.
"Vacancy fell across all segments of the market, except for B-Grade office space which remained steady," says Mountford.
At 13.6 per cent, the Gold Coast vacancy rate is now lower than Perth, Darwin, Adelaide and Brisbane.