Carparking Correlation: How Parking Fees Provide Office Sector Health Check

The CBD has always been the economic engine room of a thriving city, but one that took a serious hit during the pandemic. While the nation’s office vacancy rate has remained stable at around 13.7 per cent, according to the Property Council of Australia’s office market report earlier this year, some markets are performing better than others. Notably Brisbane, which chalked up a vacancy rate of 10.2 per cent, well below the national average. But CBD parking rates could be a good health check of the nation’s office assets, according to Ray White head of research Vanessa Rader who says they can be a “bellwether of office recovery”. More than 100,000 people work in Brisbane’s CBD, and the city’s carparks are certainly well-utilised, which is proving lucrative for owners and operators. Ray White data shows Brisbane is home to the nation’s most expensive CBD parking for the second consecutive year. Despite 50¢ public transport fares, Brisbane commuters are still paying average daily casual rates of $80.84, head and shoulders above Sydney’s $77 fee. “This marks a significant shift in the Australian parking landscape, where Sydney had historically dominated as the premium market,” Rader says. “The change reflects broader shifts in office attendance patterns and CBD vibrancy across Australian capital cities as workers continue adjusting their commuting habits post-pandemic.” Brisbane’s strong performance piggybacks off constrained carparking supply and strong office attendance, Rader says. ▲ Ray White had of research Vanessa Rader says parking can be a lead indicator for office sector recovery. But the city’s carpark operators are also offering heavy early-bird discounts of 57.9 per cent, which she says indicates strong competition for regular commuters, compared to the casual parking rates. Get Parked is at the coalface of parking rates in Brisbane. The agile parking company transforms under-utilised commercial property across Brisbane into budget-friendly at-grade parking. It provides passive income for developers waiting to activate sites. Get Parked general manager Trent Pridmore believes there are a few key themes underpinning the high carparking rates achieved in Brisbane. He says we are more car-reliant in Brisbane partly due to climate, but also the “lack of a viable and practical public transport system”. “Our CBD and fringe sites are all basically at capacity and we rarely have vacancies, demand is nearly always higher than supply,” Pridmore says. “There are also only a small number of parking providers in the market, limited competition leads to higher pricing. “The number of available parks, due to the demand and also the lack of stock also then leads to higher prices.” Brisbane Metro’s latest route opened last week and across the two legs is expected to provide an extra 30 million commuter seats annually. And while the state-funded 50¢ fares continue to be supported, Pridmore says it hasn’t tangibly affected car parking rates. “For a very short period our casual volumes fell slightly, we did have a limited number of monthly cancellations due to the 50¢ fares but those bays were quickly snapped up by clients still wanting to drive their vehicles to work,” he says. “I don ’ t think [cheaper fares] solved a real problem, it just transferred it to a different area by filling up suburban streets with commuter cars.” ▲ Get Parked general manager Trent Pridmore says their carparks remain oversubscribed despite cheap public transport fares in Brisbane. Pridmore says game-day carparks are always at capacity despite free public transport offers in Brisbane, while carparks close to night-time hubs tended to have a higher utilisation rate across day and night. “I guess at the moment we ’ re still a city that loves their cars,” he says. In stark contrast, Melbourne’s carparking rates have recorded negative growth over a 12-year period, now at $64.43, below the city’s 2013 levels of $65. Rader says this mirrors the Victorian capital’s struggling office market and the continued lacklustre return to work post-pandemic. Melbourne continues to have the highest vacancy rate among the nation’s capital city CBDs at 18 per cent. Rader says Melbourne carpark operators offer the “deepest early-bird discounts” at 62.9 per cent to capture dwindling numbers of regular commuters. Sydney ’ s market shows signs of recovery but remains below its 2023 peak of $85.05. The CBD’s 12.8 per cent office vacancy rate and positive absorption figures paint the picture of a relatively balanced office market in Sydney, but it lacks the growth momentum seen before the pandemic, Rader says. The Ray White head of research says the direct correlation between office market health and parking rates provides a valuable economic indicator of CBD vibrancy. She says discounting strategies provide additional insights into competitive pressures facing operators across Australian cities. These pressures have mounted into decision-making surrounding the sale of many of these assets. Typically purpose-built parking facilities in CBD locations are tightly held and are not often subdivided from the basement of larger office buildings. But Rader says she has seen a number of Melbourne CBD assets transact, fueling speculation surrounding their viability and long-term confidence in the asset class. Transactions have been to offshore and domestic buyers looking to reposition and redevelop sites away from pure parking plays. Currently there are a number of parking facilities on the market across Australia, suggesting owners may be capitalising on counter-cyclical investment appetite or reconsidering the long-term prospects of these traditionally stable assets. ▲ Warren Ebert says there are strong fundamentals underpinning the performance of Brisbane office assets. Sentinel Property Group recently acquired its most expensive office asset to date with the purchase of Green Square South in Brisbane’s Fortitude Valley, on the CBD fringe. Warren Ebert’s Sentinel bought up the asset at 505 St Pauls Terrace for $132 million, for a five-level A-Grade office building comprising 17,618sq m of lettable space and 355 basement carparks. “Green Square South is also an opportunistic acquisition, with a $73 million discount to previous book value. The building is fully leased to Brisbane City Council and provides substantial holding income above forecast distributions to support the repositioning of the asset,” Ebert said. “There are A-Grade office supply constraints in the fringe with strong rental growth and record low vacancy below its historic average to 9.5 per cent. Overall vacancy in Fortitude Valley is forecast to hit 4 per cent by 2028 which will further drive strong rental growth. Green Square South will be in a unique position to capture this with limited competition.”

Carparking Correlation: How Parking Fees Provide Office Sector Health Check

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