Adelaide CBD is the sixth largest CBD office market in Australia: Savills

Adelaide CBD is the sixth largest CBD office market in Australia: Savills
Adelaide CBD is the sixth largest CBD office market in Australia: Savills

The Adelaide office market has about 1.6 million square metre of lettable space.

The CBD precinct, bound by North, West, South and East Terrace, accommodates nearly 1.4 million square metres of office space and is the sixth largest CBD office market in Australia, according to Savills' CBD Office Market Briefing for the second quarter of 2016.

Outside of the CBD, lettable office space is classified as Fringe and is predominantly B and C grade office accommodation. 

In the 12 months to June 2016, Savills identified approximately 90,000 square metres of leasing activity in the central Adelaide office market, including Adelaide CBD and Fringe areas. Although this an increase on activity levels 12 months prior, it is close to the five year average of approximately 87,000 square metres.

The majority of these leases (approximately 60 percent of the volume identified leased) were in the Adelaide Core precinct. Around 60 percent of the deals reported in the 12 months to June 2016 period were new tenants, while approximately 37 percent were renewals, with the balance sub-lease and pre-commitment deals. Of the 90,000 square metres identified leased in central Adelaide in the 12 months to June 2016, the ‘Government and Community’ dominated activity by volume of space leased. However, the ‘Property and Business Services’ sector had the greatest number of transactions.

A selection of recent leasing transactions is displayed in the tables below.

Click to enlarge

Adelaide CBD is the sixth largest CBD office market in Australia: Savills

Savills’ Adelaide Lease Expiry Report analyses a database of lettable floor space in the CBD and fringe office markets. As at the June 2016 report, it is estimated that an average of 105,000 square metres of leased space in the CBD will come up for renewal each year for the next three years.

Around 40 percent of this space is leased by the ‘Government & Community’ sector and Industry’ sector, one of Adelaide’s largest occupiers, however, more than 50 percent of space due for expiry over the next three years is a combination of the ‘Property & Business services’, ‘Mining & Utilities & Industry’ and ‘Finance and Insurance’ sectors.

Click to enlarge

Adelaide CBD is the sixth largest CBD office market in Australia: Savills

In the short-term there is likely to be ongoing demand from tenants seeking to rationalise existing space, as well as from those seeking expand or upgrade into new space. A number of firms have sought to rationalise space requirements through relocation strategies, including the consolidation of separate tenancies to increase business continuity and lower costs. Others firms have upgraded and taken on expansion space.

The largest example of this includes the Department of Water and Natural Resources who has consolidated staff from two sites, including Chesser House at 91-97 King William Street and 1 Richmond Road, Keswick, into one tenancy at 81-95 Waymouth Street. The building had previously been occupied by the Australian Taxation Office before they relocated to their new premises in 2013. An internal upgrade was completed recently. The State Government will occupy the top five floors, with the balance, some 6,000 square metres, seeking prospective tenants.

Bupa has taken one floor in the new 50 Flinders Street development to consolidate offices.

The Administrative Appeals Tribunal (Government) has committed to lease two floors at 1 King William Street in a rationalisation strategy, reducing space requirements by about 500 square metres in the move. UniSuper has also leased a part-floor in 1 King William Street, understood to be slightly larger than their premises in 80 King William Street.

In a more recent deal, Hudson has relocated from 75 Hindmarsh Square to 101 Pirie Street, similarly rationalising about 500 square metres in the move.

Morgan Stanley has also relocated, moving from 115 Grenfell Street to 2 King William Street recently, although only reduced space requirements by about 100 square metres.

As at June 2016, net face rents in Adelaide CBD typically range from $395 to $460 per square metre per annum for Premium Grade, $330 to $410 per square metre per annum for A Grade and $265 to $335 per square metre per annum for B Grade. In Adelaide’s Fringe, as at June 2016, net face rents typically range from $330 to $355 per square metre per annum for A Grade and $270 to $300 per square metre for B Grade. Since Q2 2015 incentives have been stable and net effective rental levels are showing signs of growth, albeit at low levels.

Tags: 
Adelaide Office Market

Community Discussion

Be the first one to comment on this article
What would you like to say about this project?