Colliers Forecasts Gold Coast Office Vacancies Will Tighten To 7 Per Cent In 2023

The Gold Coast office market, already one of the best performers in Australia over the past year, is expected to tighten even further over the next 12 months, according to Colliers.

The most recent data from the Property Council of Australia (PCA) revealed the Gold Coast office vacancy rate fell from 10.1 per cent to 8.1 per cent for the six months to July, a level not seen in nearly 15 years.

Despite new stock coming onto the market over the next year, Colliers is expecting this improvement to continue into 2023, forecasting the Gold Coast could see another one percentage-point drop in vacancies over the next six months to about 7 per cent amid surging demand for office space across the city.

“The Gold Coast’s office market is well and truly outperforming Australia’s national CBD markets in terms of the pace of recovery,” said Bede Blatchford, Director of Colliers Gold Coast Office Leasing.

“The momentum has been building for a few years now, backed by strong demand fundamentals and a tight supply pipeline. As a result, we forecast the Gold Coast’s office vacancy rate will fall to about 7 per cent by early next year.”

While planned supply of new space remains tight within the Gold Coast’s core commercial precincts that are monitored by the PCA - namely Southport, Surfers Paradise, Bundall, Broadbeach and Robina-Varsity Lakes - new supply is coming on-stream outside of these areas which Mr Blatchford said are not recognised in the PCA’s six-monthly vacancy data.

“That’s likely to lead to much higher activity in these non-core PCA precincts over the next 6 to 12 months, as commercial occupiers look to both lifestyle precincts and locations that provide greater connectivity to Brisbane and the Pacific Motorway M1 amid less availability within the PCA precincts,” said Mr Blatchford. “This is especially so for occupiers seeking fitted offices and continuous space of 1,000sqm or more.”

Colliers has identified three new Gold Coast developments outside of the core PCA precincts that are expected to reach practical completion this year, delivering a total of around11,800sqm of new office space.

“With less than 6,000sqm of available A-Grade office space remaining within the PCA precints and continued demand following 6,901sqm of positive net absorption over the first half of 2022, newly constructed office buildings will be a welcomed relief to the market and will greatly assist in servicing tenant demand,” said Mr Blatchford.

Colliers reveals that 48 per cent of the office leases it negotiated over the past year have been to a combination of local occupiers expanding and new business entering the Gold Coast market. The remainder of demand has come from lease expiries (39 per cent), relocations (9 per cent) and businesses downsizing (2 per cent).

“The extremely low level of downsizing is another positive sign of confidence in the office market by current office tenants,” said Mr Blatchford. “It reflects the importance of having physical office space for their business.”

Colliers has reported a 150 per cent increase in enquiry and deal-flow activity from the larger occupier market with those occupiers seeking office space of 500sqm of greater over the past year in office leasing on the Gold Coast, indicating the city is increasingly being targeted by larger organisations looking for space.

“Larger national corporations are now placing the Gold Coast in their sights to establish operations,” said Mr Blatchford.

“Traditionally, the Gold Coast has been a small to medium-occupier market, but that has changed in a big way, especially since COVID. The market has benefitted significantly from the population flow from interstate to the Gold Coast over the past two years.

“With the subsequent residential boom, the office sector has experienced increased demand which has been supported by a strong local economy. It’s a trend that is generating its own momentum with established businesses growing bigger and national businesses either expanding to the Gold Coast or building on their existing base in the city.”

Mr Blatchford said the tightening labour market is also working in the Gold Coast’s favour as employers navigate the challenges of attracting and retaining talent.

“Many employers are now putting greater emphasis on creating a first-class workspace as an employee staff attraction and retention tool,” he said.

“Situating an office in a non-CBD location where employees don’t have to make long commutes, while having greater access to the amenity, wellness and an overall improved lifestyle that the Gold Coast offers, is what employees are seeking in a post-COVID work environment.”