Office Vacancy In Australia Rises To 11.7%

AUSTRALIA – Data from the Property Council of Australia (PCA) showed that average office vacancy across the country increased from 9.6 percent to 11.7 percent in the 6-month period that ended on 31 January 2020, the highest in 24 years since 1997, reported The Australian on Thursday.

Figures from the industry body revealed that owners of office space across the country are grappling with high vacancy. Properties in central business districts (CBDs) and suburbs are both dealing with this problem, indicating that the issue is noted limited to city centres.

For instance, the average vacancy level of office space across all CBDs in Australia rose from 9.2 percent to 11.1 percent during the stated period, or the greatest level in about 6 years since January 2015.

In particular, the office vacancy in Melbourne’s CBD increased from 5.8 percent to 8.2 percent, while that in Sydney’s CBD rose from 5.6 percent to 8.6 percent during the period under review.

As for other major CBDs, office vacancy levels surged to double-digit figures: Canberra (10.1 percent), Brisbane (13.6 percent), Adelaide (16 percent) and Perth with 20 percent. As for non-CBD office markets, vacancy levels ranged from 10.4 percent to 13.4 percent, the highest level in 26 years since 1995.

At the same time, net absorption of office space across Australia plunged to -89,477 sq m, the lowest level in around 8 years since 2013.

The industry body’s CEO Ken Morrison explained that while the health crisis has weakened demand for office premises, most of the gain in vacancy is due to the completion of new office buildings.

“While it’s not a surprise to see office vacancies increase in the middle of a pandemic, it is the new supply of office space that is responsible for three-quarters of this impact, not reduced tenant demand,” he noted.

In addition, Charter Hall office CEO Carmel Hourigan shared that office owners are beginning to see good signs in the market, as “there seems to be a pick-up in activity”.

“The general economy is probably in a better position than we thought last year,” she added.

Similarly, Dexus’ General Manager Peter Studley is also upbeat on the office market’s prospects. “After an uncertain year for office markets, an improvement in many of the key leading indicators signals a period of strengthening demand ahead.”