Enquiry for office space across major Australian markets remains strong for 2017, despite some tightening and a declining vacancy rate.
The office market nationally remains buoyant, with a total of 416 deals and 336,062 sq m transacted in the six months to July. A six per cent increase on the total number of deals and a 14% increase on the area transacted in the same period last year.
The Colliers International Office Leasing Demand Index is a quarterly publication that provides insight into quarter-by-quarter changes in the levels of enquiry throughout the Australian Office Leasing market.
According to Colliers, Canberra, in the first half of 2017, saw a majority of enquiries for office space less than 500 square metres. Conversely, enquiry for office space in Canberra between 1,000 and 3,000 square metres more than doubled from Q1 to Q2 2017, and there was no demand for space over 3,000 square metres in Q1 compared to Q2 where 66% was for space more than 3,000 square metres.
The last quarter saw a spike in total number of enquiries at 309% with 50,180 square metres of demand recorded.
Colliers International Director Michael Ceacis said there are two major factors that influence the increased demand for quality office accommodation, especially in Canberra’s CBD and Parliamentary Triangle.
"One is the growth of the private sector due to Commonwealth Government outsourcing," he said.
"The other is tenants realising the benefits of moving into better quality space, such as staff having better access to amenities, better space efficiency and reduced operational costs.
“Tenants are considering their options early due to foreseeable increases in rental rates for A-Grade accommodation in the CBD and Parliamentary Triangle and locking in longer term leases now.
“In the second half of the year we expect to see more than 100,000 square metres of office space to be transacted. This result will make it one of the largest uptake of office accommodation that we’ve seen for years,” Ceacis said.
“In the short to medium term, we expect the market to tighten due to lack of new stock.
“We expect the first wave of new stock to be available mid-2019 with the anticipated completion of the circa 15,000 square meters office tower, Civic Quarter in Canberra’s CBD being developed by Amalgamated Property Group.
"Further new supply is expected mid-2020."