The first phase of the impact of COVID-19 on Australia’s office markets shows only moderate effects, reflecting the strong base settings in most CBD markets at the start of the pandemic.
Australian CBD office vacancy increased from 8.0 percent to 9.2 percent over the six months to July 2020 with flat – not falling – tenant demand, according to the Property Council of Australia’s Office Market Report.
Despite the COVID-19 pandemic, aggregate Australian vacancy remains below its historic average, with the key Sydney and Melbourne CBDs sitting at less than six percent vacancy.
Queensland Executive Director of the Property Council Chris Mountford said the impacts in the South East Queensland office markets broadly mirrored the national trends.
“Vacancy in Brisbane CBD increased from 12.7 to 12.9 percent over the past six months”, Mr Mountford said.
“It was a very similar story in the Brisbane fringe market with vacancy increasing from 13.6 to 14.2 percent.
“Importantly, both markets recorded positive tenant demand through this period, with the vacancy increases being driven by supply additions, not a reduction in demand for space.
“It is a slightly different story on the Gold Coast where the vacancy rate increased marginally from 12.8 to 13 percent, but this was driven by negative demand for space.”
Office vacancies are calculated on whether a lease is in place for office space, not whether the tenant’s employees are occupying the space or working from home.
Key markets of Sydney and Melbourne CBD had vacancies of 5.6 percent and 5.8 percent respectively, while vacancies in Canberra are at 10.1 percent, Adelaide at 14.2 percent and Perth at 18.4 percent. All capital city markets recorded lower vacancy in prime over secondary stock.
Sublease vacancy in the capital cities – a key metric in falling markets – increased by 0.2 percent, but is still at modest levels compared to previous downturns.
Market analysts will be closely watching tenant demand and sublease vacancy over the next six months as the economic effects of the pandemic continues to play into office markets.
ATTACHED: Brisbane, Brisbane Fringe, Gold Coast office market analysis
