Gold Coast Office Market Demonstrates Remarkable Performance and Diversification

The Gold Coast Office market continues to push boundaries, challenging conventional norms in comparison to other markets nationwide. Recent data analysis underscores its exceptional performance in terms of occupancy rates, rental uptake, and incentive contractions, setting a new standard for the industry.

According to the most recent Property Council of Australia (PCA) statistics, the combined vacancy rate across all markets reached 6.3%, a marginal increase from an earlier record low of 5.8% earlier in the year. However, each segment within the market exhibited consistent improvements, demonstrating the region’s resilience and adaptability, especially when compared to the opposite trends observed in markets throughout the country.

Notably, the B-Grade market exhibited the most impressive performance during this period, with its vacancy rate contracting from 5.6% to a commendable 4.4%. Meanwhile, the Prime Grade market witnessed a minor increase in vacancy from 4.4% to 4.6%.

Among the Gold Coast precincts, Bundall retained its status as the most tightly held precinct with a vacancy rate of 4.8%. Southport experienced a significant contraction, dropping from 6.6% to an impressive 5.2%, while Robina/Varsity showcased robust improvement, with the vacancy rate decreasing from 8.6% to 5.2%.

Whilst the data suggests the demand is there, there has been very limited new stock in 2023 and no new supply beyond 2023. The delivery of future supply is reliant on rental growth to support increased construction costs, and while we have seen steady uplift, it remains a challenge to justify the rates of which some of these builds need to achieve to get out of the ground.

The growth in the Gold Coast office sector can be primarily attributed to a substantial surge in migration to the South East Queensland (SEQ) region in the aftermath of the pandemic. Predictions indicate that net migration could surpass 100,000 by year-end, a substantial portion of which is moving to the Gold Coast. This influx of population naturally leads to an expanding workforce. Australian Bureau of Statistics (ABS) data showcases around 4,200 new business registrations on the Gold Coast between 2020 and 2022, out of which 2,500 were recorded in the 21/22 period.

The Gold Coast has managed to diversify its economic landscape, shifting away from its traditional heavy reliance on tourism. Whilst Tourism still forms a major role in the Gold Coast success, the emergence of a thriving commercial industry is evident, including the expansion of professional services such as legal, accounting, advisory, and consulting services. The healthcare sector has also made strides, encompassing specialist, allied health, and medical technology enterprises. Technological advancements, particularly exemplified by EDQ’s Lumina project, further contribute to the area’s overall growth and diversity within the market. Additionally, the revitalisation of institutional operators, coupled with a robust industrial market and resurging tourism sector, has led to flourishing retail and hospitality markets.

Recent notable transactions underscore the vibrancy of the Gold Coast office market. The Wyndham building, spanning 7,931sqm*, transitioned from Corval to the Gold Coast City Council for
approximately $46.2 million, reflecting a solid yield of 7%. Alceon & Brickshop’s acquisition of The Atrium in Varsity Lakes, a 3,700sqm* building at $11.4 million while only 78% occupied, showcases strategic investment decisions. In a significant deal, the 10,000sqm* former Foxtel building, recently acquired by Exceed Capital from Centuria for $40 million, demonstrated a successful transaction within the dynamic market.

Looking back further, a post-COVID market rebound is evident in the transaction of 50 Cavill, changing hands from GDI to Eleanor Investments for an impressive $113.5 million in 2023, and Evans Long pre committed sale of their Proxima development to HomeCo for $80 million in 2021, further underscoring the Gold Coast’s allure for investors and developers.

The Gold Coast office market’s compelling performance and diversification across various sectors underscore its resilience, adaptability, and attractiveness to both investors and businesses alike. As the market continues to evolve, it positions itself as a prime destination for growth and investment opportunities.