Experts have predicted that the Gold Coast office market will tighten even further over the next 12 months, as vacancy rates fall.
According to data from the Property Council of Australia, the Gold Coast office vacancy fell its furthest in 15 years over the six months to July, dropping from 10.1% to 8.1%.
Commercial real estate firm Colliers expects the vacancy rate to continue falling, predicting it will reach about 7% by 2023.
Bede Blatchford, Director of Colliers Gold Coast Office Leasing, said the market’s recovery is outperforming the rest of Australia’s capitals.
“The momentum has been building for a few years now, backed by strong demand fundamentals and a tight supply pipeline,” said Mr Blatchford.
Non-core precincts leading newest supply
According to Mr Blatchford, new supply within the Gold Coast’s core commercial precinct remains tight.
However, there is new supply on the way within non-core precincts which is therefore not recognised by PCA’s data.
“That’s likely to lead to much higher activity in these non-core PCA precincts over the next 6 to 12 months, as commercial occupiers look to both lifestyle precincts and locations that provide greater connectivity to Brisbane and the Pacific Motorway M1 amid less availability within the PCA precincts,” he said.
“This is especially so for occupiers seeking fitted offices and continuous space of 1,000sqm or more.”
Three new developments outside of the core PCA precincts are expected to reach completion this year and will deliver an additional 11,800 sqm of office space to the market.
“With less than 6,000sqm of available A-Grade office space remaining within the PCA precincts and continued demand following 6,901sqm of positive net absorption over the first half of 2022, newly constructed office buildings will be a welcomed relief to the market and will greatly assist in servicing tenant demand,” said Mr Blatchford.
Demand for Gold Coast office space growing
Colliers said nearly half of recent lease negotiations have been due to local occupiers expanding or new businesses entering the Gold Coast market.
Only 2% of negotiations however have been due to downsizing, which Mr Blatchford said represents a sign of confidence and reflects the importance of physical space for businesses.
Enquiries for spaces over 500 sqm have increased by 150%, indicating that larger corporations are seeking space on the Gold Coast.
“Traditionally, the Gold Coast has been a small to medium-occupier market, but that has changed in a big way, especially since COVID.
“The market has benefitted significantly from the population flow from interstate to the Gold Coast over the past two years.”
Bede Blatchford, Colliers Gold Coast
Growth in the residential sector has also been a significant driver of increased demand in the office sector.
“It’s a trend that is generating its own momentum with established businesses growing bigger and national businesses either expanding to the Gold Coast or building on their existing base in the city.”
The tightening labour market is also working in the office market’s favour, as employers place more emphasis on the physical workplace as they vie to attract and retain talent.
“Situating an office in a non-CBD location where employees don’t have to make long commutes, while having greater access to the amenity, wellness and an overall improved lifestyle that the Gold Coast offers, is what employees are seeking in a post-COVID work environment,” concluded Mr Blatchford.
Article source: thepropertytribune.com.au