Vacancy in Canberra’s Parliamentary precinct hits 10-year low: Colliers

Vacancy in Canberra’s Parliamentary precinct hits 10-year low: Colliers
Vacancy in Canberra’s Parliamentary precinct hits 10-year low: Colliers

Office vacancies in Canberra’s Parliamentary precinct have hit a 10-year low of 1.2 percent, owing to strong leasing activity over the past six months, according to real estate firm Colliers International.

The tightening of the A-grade office market contrasts with the slight drop in Canberra CBD vacancy, largely due to the withdrawal of a number of C and D-Grade buildings.

Michael Ceacis, director of Office Leasing at Colliers, said the uptake of A-Grade office space is due to tenants seeking quality office accommodation.

“Landlords are now offering reduced incentives. Early last year 25 percent incentives were being offered and now we are seeing 15 percent or lower. Face rents in Barton are increasing and A-Grade office space is being leased for more than $440 per square metre,” said Ceacis.

“We’re finding that tenants currently occupying C and D-Grade office space in the Parliamentary precinct are looking to stay within the area but in better quality accommodation. This year we’ve already spoken to a number of tenants with a total requirement of over 10,000sq m of office space in A-Grade buildings and there isn’t enough supply to meet this demand.” 

Tenants looking to upgrade are seeking office space with a minimum of 4.5-star NABERS Energy rating with good natural light, end-of-trip facilities, good car parking ratio and close to amenities. 

The office market is expected to tighten further with no new A-Grade stock planned in the short-term. 

According to the latest PCA data, there is 3,348 sqm of A-Grade office space available for lease in the Parliamentary precinct. 

Colliers says tenants’ flight to quality and the limited supply will lead to a further tightening of A-Grade stock, driving incentives down even further and an increase in rental rates. 

According to Colliers International research, there are only a handful of buildings that could potentially be repositioned to meet A-Grade standards in the area.

Landlords willing to spend the capital expenditure needed to upgrade their buildings are securing tenants. As an example, a refurbished office building at 44 Sydney Avenue, Barton is now fully occupied.

“In the past five years we’ve seen several key sites in Barton developed into residential and hotel accommodation, such as Little National Hotel and the Governor Place precinct,” Colliers executive Aaron Bruce said.

Tags: 
Canberra Office Market

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