Let’s take a look at what’s happened in the Canberra property market over the past year in terms of office rent, vacancy and new supply.
Following the pandemic, economic uncertainty and hybrid working arrangements slashed office demand nationwide, except for in Canberra, where a y-o-y decrease was recorded.
Dubbed Australia’s most resilient office market, Canberra’s total vacancy rate has since dipped to as low as 5.5% (Q1 2022) but recently jumped back up to 8.2% following an unprecedented level of new supply (113,467 sqm), including 6 Brindabella Circuit and 25 Catalina Drive.
Most of this new stock is A-grade, contributing to the increase in Prime vacancy over the last 12 months.
Despite this rise, Canberra’s vacancy rate remains the lowest of all capital cities thanks to sustained high demand from government tenants and a spike in demand from the private sector, particularly for prime office space.
In Canberra, quality office space is in high demand but limited. For this reason, Prime face rents increased over the past year, currently reported at an average of $507 sqm Gross*. Secondary grade face rents have also increased. They now hover at $422 sqm Gross*.
Prime face incentives have stabilised but remain at an all-time high at 26%. We anticipate that incentives will continue to increase as landlords attempt to lock in pre-commitments to new and refurbished stock.
No subleasing data is currently available for Canberra. However, we know it's high as major tenants seek to downsize.
The Canberra office market is typically resistant to the commercial property trends that affect other cities. This is primarily due to the high proportion of government tenants (approximately 70%) on long-term leases.
However, one national trend making an impact is the ‘flight to quality.’ Like other major cities, there has been a noticeable uptick in tenants seeking high-quality space to help lure staff back to the office or assist in their attraction and retention strategies.
Most companies are willing to pay a premium for top-tier office space. However, they expect more from their buildings, seeking high-class shared amenities and flexible parking arrangements.
Over the next few years, Government headcount is also expected to grow, which will drive further leasing activity.
Tenant CS is a commercial tenant representation firm that provides tenant advisory services to businesses. We work across Australia, focusing on Canberra, Sydney, Melbourne, Brisbane, Perth and Adelaide.
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