Gold Coast office market buoyed by business demand as vacancies plunge to 10.1 per cent
The Gold Coast office market continues to outperform the major capitals with vacancies plunging to 10.1 per cent in January.
With a decrease in vacancies across all five of the city’s major office precincts, the Gold Coast office vacancy rate has now fallen 4.2 per centage points in the past 12 months to its lowest point since the pre-GFC era.
The Gold Coast compares with a 15.4 per cent vacancy rate in the Brisbane CBD, 14.5 per cent in Adelaide and 11.9 per cent in Melbourne.
Colliers says the Gold Coast market has been buoyed by a number of major leasing deals that have supported positive net absorption of 17,216sqm of office space throughout the year.
Bundall is now the tightest office market on the Gold Coast with a vacancy rate of just 6.4 per cent.
“This is a level we haven’t seen in years for Bundall,” said Bede Blatchford, associate director of office leasing at Colliers International.
“Office vacancies on the Gold Coast are down from 11.3 per cent six months ago and 14.3 per cent this time last year, and we’re seeing solid demand continuing into the new year.”
The biggest improver for the year has been Robina-Varsity Lakes which has fallen from a vacancy of 18.8 per cent at the start of 2021 to 10.9 per cent in January this year.
Colliers notes that much of this decrease can be attributed to leasing activity at 35 Robina Town Centre Drive, which is owned by Centuria Office REIT, where more than 6,000sqm of office space were leased throughout 2021. All were transacted by Colliers International.
Despite the Gold Coast securing big leases from a number of major corporate relocations in 2021, Mr Blatchford says the strength of the market stems from the resurgence and resilience of small to medium enterprises (SMEs).
“SMEs make up about of 70 per cent of Gold Coast office occupiers and they continue to see office space as an important part of their business,” said Mr Blatchford.
“Many SME occupiers expanded throughout 2021, and that has been the catalyst for the Gold Coast office market’s strong performance.
“We have also seen businesses decentralise from CBD markets to take up space in regional areas such as the Gold Coast. The appeal for them is the lower density of population compared to CBD locations, reduced commute times for employees and less reliance on public transport, which are all factors that drive employee wellbeing and satisfaction.”
Mr Blatchford said improved office market conditions have led to an increase in face rents in some Gold Coast office precincts, while incentive levels have also stabilised since 2020 when the market was rocked by COVID-19.
Colliers sees conditions improving further in 2022, driven by a limited development pipeline within the Gold Coast’s key office precincts of Southport, Bundall, Surfers Paradise, Broadbeach and Robina-Varsity Lakes.
Just two projects are currently under construction in these areas – at 26 Lawson Street in Southport and 18 Campus Crescent in Robina – which will deliver a combined 4,275sqm of space in 2022
More than 9,300sqm of office supply is currently under construction outside of these precincts in the Gold Coast’s northern corridor that is to be delivered in 2022including 1 Zupp Drive at Ormeau (3,745sqm) and 120 Siganto Drive in Helensvale (5,685sqm)
“After a strong 2021, we anticipate the Gold Coast office market to maintain its momentum throughout this year with a possible further tightening of the city’s overall office vacancy due to the modest construction pipeline,” said Mr Blatchford.
“We’re also going to see a continuation of the flight to quality theme from occupiers that will likely lead to more office buildings undergoing refurbishment programs as landlords take advantage of positive leasing conditions.
“Businesses these days place a great deal of emphasis on staff wellbeing and satisfaction, and with the tighter labour market more businesses have been looking for office space that provides a workspace that employees want to be a part of.”