This article is from the Australian Property Journal archive
OFFICE rents in Canberra are set to continue their upward trend in 2017 as vacancies decline and incentives dwindle.
Cushman & Wakefield’s Office Snapshot Q1 2017 for the nation’s capital suggests the sustained demand in office leasing will continue to face limited A-grade stock.
“After a sustained period of limited rental growth, the recent decline in vacancy has prompted incentives to trend downwards, resulting in positive growth in gross effective rent,” head of research, Dominic Brown said.
“With limited new supply over the near term, the potential exists for continued downward incentive movement and an upward rental trajectory,” he added.
Prime effective rents rose by 1.1% in the first quarter of 2017 to $340 per sqm, up 3.1% annually, whilst prime incentives were at 21%.
The only new office stock currently under construction is the entirely pre-committed TOP Greenway development of 30,707sqm in Tuggeranong, due for completion late this year. The 18,000sqm Civic Quarter tower and 20,000sqm Constitution Place project are not due to come online until mid-2019 and late 2020 respectively.
Vacancy rates have decreased since the second half of 2014 from 15.4% to 12.6%. Tenants have pursued A-grade stock above secondary grade space in massive numbers – A-grade stock has recorded positive net absorption and vacancy of 3.0% in that time outside of the airport precinct, whilst secondary stock returned net absorption of -17,454sqm and 15.0% vacancy.
More than 32,600sqm of secondary stock was withdrawn in the second half of 2016, with 15,671sqm permanently for residential or hotel conversion.
Inclusive of the airport precinct, the prime space vacancy rate is at 9.8%.
Australian Property Journal
