Pain levels rise in Adelaide office market
A string of refurbished properties returning to the market has pushed the vacancy rate in the Adelaide CBD to the highest point since mid-1999, with experts predicting that 2017 may bring further pain before a marginal recovery next year.
The one small bright spot is at the premium end of the market where vacancies stayed steady at 8.3 per cent. Property Council of Australia South Australian executive director Daniel Gannon said population growth needed to be pursued along with reforms to building codes to help the local economy recover and to ensure higher levels of demand from tenants.
Adelaide CBD vacancy levels reached 16.2 per cent, up from 15.4 per cent. Mr Gannon said the state faced significant challenges as its economy transformed.
‘Real stalemate’
Savills director of office leasing in South Australia, Adam Hartley, said the vacancy rate increase had been “mainly driven by refurbished properties releasing vacant accommodation back into the market”. But there had been an improvement in the smaller end of the market where tenants looking for smaller spaces of below 500 square metres had been increasingly active.
Andrew Bahr, CBRE director of advisory and transaction services, said “a real stalemate exists”, with low levels of lease expires in 2016 resulting in limited demand. But he predicted that vacancy rates and incentives being offered would begin to drop by the end of calendar 2017.
The French submarine builder DCNS opened a new headquarters in the city fringe suburb of Keswick in late December in a ceremony attended by Prime Minister Malcolm Turnbull, whose government awarded a $50 billion-plus contract to the company to build 12 submarines in Adelaide starting from about 2025. But the spin-off work as other firms position themselves to be part of the project is expected to gradually build before the actual construction of the submarines.
