Sunshine Coast office market continues stabilising: HTW Commercial

The office market on the Sunshine Coast has continued to remain relatively stable during 2019, according to the latest report from valuation firm Herron Todd White.

The property valuation firm found, one of the big questions has been, “What will be the effects be of the large supply of which entered the market during 2018?” The answer to this has generally been a reduction in rentals for tenants, though in prime locations and A-grade stock, that reduction has been lower than the remainder of the market.

They have seen significant incentives for vacant space, though overall reductions in market reviews for existing tenants are not as significant.

One of the reasons for this is likely the high costs associated with moving work spaces for the majority of tenants with over 150 square metres of space.

Therefore there have been numerous sales of existing offices in the market.

These sales indicate that the market is still liquid for a range of holdings.

The report authors said, "the owner-occupier market is still dominating sales up to $1.5 million with owners looking to secure high quality space generally above $4000 per square metre with lower quality space typically in the $3000 to $4000 per square metre range."

"Investors are looking for multi-tenanted holdings to spread overall cash flow risk in this market, which has high vacancy, with sales typically being seen in the seven to eight per cent range depending on WALE, quality of complex, location and redevelopment potential."

"We have not seen a higher end sale over $5 million in the office space to date in 2019, though there has not been stock available to the market in this range."

"The next influx of supply is due to enter the market during the early months of 2020 with the first building within SunCentral due to be completed at that time with construction recently commenced," they concluded.