Stable vacancy rate for the Gold Coast

By Greg Bell

The Gold Coast has cemented itself as a fantastic locale for domestic and international business investment. Commercial property looks to continue its stellar run in southeast Queensland with the latest figures from the Property Council of Australia showing that vacancy levels for office space on the Gold Coast have stabilised – which is great news for property investors looking to get a piece of the commercial property pie. 

According to Property Council of Australia's Office Market Report, office vacancy rates on the Gold Coast have stabilised at 15.2 per cent. In the years following the global financial crisis, demand for office space declined, but over the last six months to July last year the Gold Coast market experienced a six-year low in vacancies. As well, the city is now posting the highest levels of demand since the crisis – which offers a great incentive for those looking to invest in commercial property on the Gold Coast

Chris Mountford, Queensland Executive Director of the Property Council of Australia said this is fantastic news and points to a bright financial future for the Gold Coast.

"The good news is that this strong demand for office space continued in the six months to January 2015," Mr Mountford says.

A grade is king

Overall, the report showed that only B grade property recorded any increases in vacancy levels.

"A further 7,200 square metres of office space was absorbed in the last 6 months of 2014," Mr Mountford said.

"This is a clear indication of increased confidence in the region, and provides a stable base for future activity."

Mr Mountford said that while the overall vacancy rate rose by a marginal 0.2 per cent over the last half of 2014,  this has more to do with new office space being added to the market. The report shows that an impressive 10,015 square metres of office space was added to the market, indicating promising levels of constructive, demand and ideal selling conditions for investors. 

The report shows that C and D grade assets are in hot demand in the Gold Coast, with vacancy rates in these two categories dropping by impressive 15.4 percent to 11.6 per cent, and 21.6 per cent to 12.9 per cent respectively. A and B grade properties showed more moderate declines, with A grade vacancies dropping from 19 per cent to 18.9 per cent. B grade vacancies increased from 11.2 per cent to 15.5 per cent.

Started at the bottom

What's more, the Gold Coast has risen through the ranks and no longer has the highest vacancy rates in the country. Both the Brisbane CBD and Canberra have now recorded higher office vacancy levels than the Gold Coast with 15.6 and 15.4 percent respectively.

However the report does show a lot of variation between locations. Whereas the Gold Coast itself continues to post encouraging results, Bundall, Robina-Varsity Lakes and Southport posted an increasing number of vacancies for the last six months of 2014. Chris Mountford noted that while might be the case at first glance, examining the differences shows how well they are performing. 

"Surfers Paradise has again recorded a vacancy above 25 percent. This is in stark contrast to the region's best performing sub-markets Broadbeach and Robina-Varsity Lakes which recorded vacancy rates of 7.6 and 10.4 per cent respectively," he said.

"Interestingly vacancy in Southport rose slightly from 14.2 to 14.8 per cent. With Southport now designated as a Priority Development Area, this market will be interesting to watch over the coming 12 to 18 months to see if the designation fast tracks demand and renewal."

It's going to be an exciting few years for the office market on the Gold Coast. The city is only showing a moderate amount of supply with 4,624 square metres due to come online this year and around 3,196 square metres due in 2016, but increasing confidence and the upcoming Commonwealth Games, the office outlook is a bright one for this corner of Queensland.  

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