Businesses hungry for office space as remote working diminishes
Working from home could become a thing of the past, according to new data suggesting the appetite for premium work office spaces is becoming the new hot commodity on the Gold Coast.
According to the 2023 Gold Coast Market report by Colliers, office vacancy on the Gold Coast has dropped to its lowest level in 14 years due to the demand for workers returning to offices since the pandemic.
Colliers International Gold Coast Director Bede Blatchford says that a drastic increase in remote working and a decline in demand for office spaces was one significant effect of the Covid-19 pandemic.
"As a result of the pandemic, we certainly saw an increase in remote working; however, fast forward to three years since the start of lockdowns, and we are once again witnessing strong demand for office vacancy," said Mr Blatchford.
"With a total vacancy of 27,467 sqm out of 454,149 sqm of total stock, the Gold Coast office vacancy rate declined to 6.0% in January - its lowest level in 14 years.
"The market is expected to remain competitive in 2023, with vacancies expected to continue to decline due to strong market fundamentals, a constrained supply pipeline and people returning to the workplace."
Brisbane-based investment company Exceed Capital has tapped into the strength of the Gold Coast office market by reaching near full occupancy at 154 Varsity Parade in Varsity Lakes following a $2.5 million refurbishment of the property.
The three-level building had a vacancy rate of about 45 per cent when Exceed Capital bought it in April 2021. However, it was reduced to 3 per cent within 18 months under Exceed Capital's proactive asset management strategy, with only a single 150sqm ground-floor vacancy remaining at the property.
To meet demand, Exceed Capital took a large single-floor vacancy of 1,100 sqm and split it into four tenancies, with new leases recently secured for all of them.
"The strategy has revealed the depth of the Gold Coast office market for sub-400sqm occupiers," said Mr Blatchford.
"Gold Coast is predominately made up of small to medium occupiers as opposed to the level of corporates in CBD markets. This sector accounts for most Gold Coast office demand which is currently driving a tightening of vacancies across the city's key office precincts.
"It's been the resilience of the SME-occupier sector that is supporting the local office market, and that is leading to a tightening of the overall vacancy rate."
Colliers International, CBRE and Harcourts Coastal Commercial are co-ordinating the leasing campaign for the Varsity Lakes property.
"The strategy implemented by the owner shows that landlords who are willing to invest in their buildings to meet demand are achieving leasing success in the Gold Coast's buoyant commercial leasing market," said Nick Selbie of CBRE.
"Exceed's leasing strategy is playing well to the market as the refurbishment is capitalising on the 'flight to quality' theme we're experiencing from occupiers seeking high-quality office accommodation."
Among the recent notable lease deals negotiated for the Varsity Lakes property are:
• Tripadeal, which has secured a five-year lease on 397sqm, negotiated by Bede Blatchford and Renee Highes, of Colliers
• Varsity Lakes Family Practice, which has a 10-year ground-floor lease on 350sqm in a deal transacted by Nick Selbie of CBRE
• Cobra Digital, which has secured a five-year lease on 312sqm, negotiated by Bede Blatchford and Renee Hughes, of Colliers
• Zonos, which has recently commenced a new five-year lease on 175sqm, in a deal transacted by Nick Selbie of CBRE
• Revibe Wellness and Recovery, which has secured a new eight-year lease on 160sqm, negotiated by Nick Selbie of CBRE
• Pearl Bridal signed a five-year lease on 140sqm, negotiated by Brandon Johnson of Harcourts Coastal Commercial.
"The latest leases have further reduced available office space within the Varsity Lakes precinct," said Harcourt Central's Mr Johnson. "It's added to an already tightening market among properties with a premium office offering."
According to Property Council of Australia data, Gold Coast office vacancies fell from 8.1 per cent to 6.0 per cent in the six months to the end of January this year, making the Gold Coast a standout performer in non-CBD office market in Australia.