Canberra's A-grade office vacancy rate much lower than first thought, Colliers says

Colliers International director of office leasing Michael Ceacis said the discrepancy was due to not taking into account spaces that were recently completed or pre-committed.

“When we look at space in occupation, A-grade vacancy [in Canberra] is at 9.4 per cent,” he said.

”However, when we take into account the musical chairs effect, where a new building is considered complete or space is pre-committed to, the vacancy rate is significantly less.”

He pointed to the Airport, which was recorded in the PCA report as having vacancy rate of more than 75,000 square metres or 40.2 per cent. But Colliers found that only 27,000 square metres, or 14.09 per cent of this space, was actually up for lease.

That meant Canberra’s actual vacancy rate for A-grade offices was 4.77 per cent, which was lower than the Melbourne CBD at 6.1 per cent and only just higher than the Sydney CBD, which was at 3.6 per cent, he said.

Mr Ceacis said the plummeting A-grade vacancy rate in Canberra would see rents increase as demand for premium space far outweighed the supply.

“We expect incentives to drop and rents to increase as tenants seek out better quality accommodation and find limited A-grade options,” he said.

“The limited supply of A-grade stock will push tenants to B-grade stock, and we expect vacancy to tighten, especially in the CBD and Parliamentary Triangle, as tenants seek out refurbished spaces that are still considered B-grade but are refurbished to a very high standard.”

The Property Council ACT executive director Adina Cirson told Allhomes the council’s results demonstrated “a clear preference for premium office product”.

“We need to act quickly to make it more attractive for investors to convert tired office spaces into refreshed, higher quality, more sustainable office space,” Ms Cirson said.

“This is particularly relevant in the Woden Town Centre, where we need to prioritise renewal of our oldest office buildings.”