Gold Coast office project halt drives competition for A grade space

October 12, 2011 | Office | Commercial

A complete halt in the construction of new major office projects on the Gold Coast is driving competition amongst property owners and tenants to snap up the remaining A grade stock, resulting in almost 12,000sq m or nine per cent of A grade vacant space being leased between January and July 2011, according to the latest research from Colliers International.

The Colliers International research revealed that over the last 12 months, no new A grade office space was added to the five main office precincts on the Gold Coast.

Additionally, the overall vacancy rate dropped by 1.6 per cent to 22.4 per cent during the six months ending July 2011.

Lynda Campbell, Colliers International Research Manager, who compiled the report, said t he reduction in new supply during the first half of 2011 will assist in easing potential vacancy increases and should see the market stabilise in the near to mid-term.

“A grade office space recorded the strongest performance over this period, with a decrease in vacancy of 9.1per cent,” she said.

“This comes from a high of 39.5 per cent during the six months ending January 2010, with total vacancy of A grade stock now sitting at 25.3 per cent.”

Ed Howard, Colliers International Manager Office Leasing, said astute tenants are taking advantage of lower rents and higher incentives and moving or expanding into A Grade space while they can.

“Should this trend continue, all recently constructed A grade vacancy will be leased within a one year period limiting opportunity for tenants to secure new office space on the Gold Coast,” he said.

Major tenants committing to premium quality accommodation over the past 12 months has included:

  • The Rocket in Robina - Allconex committed to 3,500sq m over five floors in November 2010 and WMS Accounting secured 1,200sq m over two floors in March 2011;

  • 7 Bay Street, Southport - McConnell Dowell leased 1213sq m in July 2011;

  • Corporate Centre Two in Bundall - Wyndham Resorts committed to 4,500sqm over five floors in November 2010;  and

  • The Oracle in Broadbeach - Macquarie Southern Cross Media secured 1,855sqm over one level in February 2011.

Of the five office precincts across the Gold Coast, the Robina / Varsity Lakes precinct recorded the strongest performance with a decrease in the vacancy factor of 5.7 per cent to 20.4 per cent up to July 2011.

A breakdown of the two suburbs shows the largest absorption occurred in Robina with a dramatic fall in vacancy from 21.8 per cent to 12.5 per cent over the most recent six month period. Varsity Lakes on the other hand recorded an increase to 33.1%. The largest take up of office space occurred in The Rocket tower at Robina.

Broadbeach recorded the second highest fall in vacancy with a decline of 5.1 per cent to a total of 29.8 per cent. Although this precinct has shown strong absorption over the six months to July 2011, it is still recording the highest vacancy factor of the five office precincts across the Gold Coast. The addition of The Oracle (6,259sq m) to the Broadbeach office market earlier this year has pushed the overall vacancy factor to its highest level. Local agents report strong leasing results at The Oracle which should reduce the vacancy factor over the next six months.

The Southport precinct saw a slight reduction in the vacancy factor of 0.8 per cent during the six months to July 2011. At 18.2 per cent, Southport has the lowest office vacancy factor across the five Gold Coast office precincts.

No new office space has been added to the Southport market over the past 18 months which has helped to reduce the vacancy level. A total of 6,169sq m has been absorbed in Southport over the last 12 months.

Bundall has reported the weakest performance of the five office precincts and is the only precinct to record an increase in vacancy. Eight consecutive periods of increased vacancy and negative absorption have taken the vacancy factor to 29.1 per cent. No new office space has been added to the Bundall market since the inclusion of Corporate Centre Two in July 2009.

The vacancy factor for Surfers Paradise dipped by 0.5 per cent during the six months ending July 2011, to record a figure of 23.9 per cent. The majority of take up was in the sub lease sector. No new supply has been added to Surfers Paradise for approximately five years, while just over 5,000 sq m has been withdrawn from the market.

- ENDS -

For further information please contact:

Susan Epp
PR & Communications Manager | Queensland

Tel: +61 7 3026 3322

Mob: +61 434 573 026

Email: Susan.Epp@colliers.com   

 

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