Surging demand for office space in Sydney and Melbourne has pushed the national vacancy rate to 9.4 per cent, according to research released by JLL on national office markets.
Tenants have acquired 90,000sq m of office space nationally over the quarter and 197,400sq m over the 2017-18 financial year.
Sydney registered 51,100sq m of space being taken over the quarter downing the vacancy rate in the CBD to 4.5 per cent from 5.5 per cent in the first quarter.
“Sydney and Melbourne are more sensitive to financial markets and posted very strong net absorption results in 2Q18,” JLL head of research Australia Andrew Ballantyne said.
“Sydney and Melbourne will feature in any discussion of the world’s strongest office markets over the 2018-19 financial year.”
“However, a shortage of prime grade space will curtail net absorption and we expect to see a notable increase in tenant retention rates.”
In Sydney, vacancy has directly affected rent pricing with prime gross effective rents increasing by 1.6 per cent over the quarter and by 12.5 per cent over the 2017-18 financial year.
CBD Vacancy Rate
| City | 1Q 2018 | 2Q 2018 |
|---|---|---|
| Sydney | 5.5% | 4.5% |
| Melbourne | 5.4% | 4.6% |
| Brisbane | 13.9% | 14.4% |
| Perth | 21.4% | 20.9% |
| Adelaide | 15.2% | 15.1% |
| Canberra | 13.2% | 13.4% |
The Melbourne CBD recorded 41,900sq m of office space taken over the quarter and 113,600 sq m over the 2017-18 financial year.
The CBD vacancy rate in Melbourne also dropped from 5.4 per cent in the first quarter to 4.6 per cent.
“The leasing market we are watching very closely is Perth with net absorption double the historical average over the 2017-18 financial year,” Ballantyne said.
Vacancy in the Perth CBD trended lower in the second quarter to 20.9 per cent and is at the lowest level in almost three years after further space was taken up.
In the Brisbane CBD, the up-take of space was negative, with vacancy increasing to 14.4 per cent.
The negative result was a direct result of Aurizon moving into a new development in Fortitude Valley.
“The negative result does not alter our view that the Brisbane CBD leasing market is showing tangible signs of improvement.
"Excluding the Aurizon relocation, the Brisbane CBD would have recorded positive net absorption,” Ballantyne said.
