Gold Coast Office Market Lagging
While a sense of confidence has returned to the Gold Coast economy ahead of the city hosting the 2018 Commonwealth Games, it has not translated as well to its office market, according to Ray White Commercial.
Ray White Commercial Head of Research, Vanessa Rader, said the total vacancy position of the Gold Coast office market after three years of stability was up 90 basis points on January, 2016, results to 14.3 per cent in July, 2016.
“With only limited supply completions this period of 800 sqm, the increase in vacancy has come from tenant losses with net absorption for the six months to July 2016 recorded at minus 4,511 sqm,” Vanessa Rader said in the Between the Lines Gold Coast Office Market Report September 2016.
“This is strongly weighted to the A grade market which has increased vacancy from 15.9 per cent last period to 18.7 per cent as well as C grade, which was up from 11.2 per cent to 12.9 per cent. B grade was the better performer resulting in 1,877 sqm of net take up over the last six months reducing vacancy to 12.4 per cent, the lowest rate in two years.
“Bundall and Southport remained steady at 12.4 per cent and 15.5 per cent respectively, while Surfers Paradise has had a strong reduction to 19.3 per cent from 29.9 per cent just 12 months ago. Broadbeach vacancy grew to 8.8 per cent while the larger Varsity Lakes/Robina region has recorded a large minus 4,301sqm tenant contraction with vacancies to 10.0 per cent this period up from 6.9 per cent just six months ago. The bulk of this is due to Members Alliance dissolving, leaving close to 4,000 sqm at The Rocket building in Robina.”
Ray White Commercial Gold Coast’s Steven King said the Gold Coast investment market has yielded good results with new lows achieved in yields for many industrial and retail investments.
“There still is a demand for tenanted office assets and due to the current low interest rates many tenants are opting to buy rather than lease,” Steven King said.
“Looking forward, the ongoing fundamentals of low interest rates and improvements to the economic position of the city should be a strong driver for this market.”