Gold Coast office market shows signs of improvement: HTW
Demand for A-grade office space on the Gold Coast has picked up significantly over the past 18 months, with the vacancy rate falling from 40.2% in June 2010 to 25.3% in October 2011, according to valuer Herron Todd White.
The amount of available A-grade office space has fallen over this time frame from 54,000 square metres to 34,000 square metres, equating to net absorption of 20,000 square metres.
The take-up of A-grade office space has been helped by a number of factors, including the fact that there has been little new A-grade stock coming on board over this period.
Total vacant space across all grades on the Gold Coast sits around the 100,000-square-metre level – more or less where it was 18 months ago, the report says.
“Essentially what has happened is that the tenants of B- and C-grade properties have been lured in to A-grade buildings, leaving the B- and C-grade categories with higher vacancies,” explains HTW in the November report.
Furthermore, to encourage leasing deals for A-grade space, landlords have had to offer reductions in face rentals and the solid levels of incentives, a common feature of the market, with the report noting that market and economic conditions remain weak.
In the A-grade space, demand is higher for buildings of high quality and carrying green-star rating.
The report notes that this year the majority of prominent A-grade buildings on the Gold Coast have either been or are currently on the market for sale, or are undergoing major leasing campaigns.
These include 50 Cavill Avenue, the dominant office tower in Surfers Paradise, featuring 22 levels and net lettable space of 16,702 square metres.
The building was listed for sale by expression of interest earlier this year, but is now off the market with a large amount of vacant space within the building.
A major leasing campaign is underway to fill this space.
According to HTW, the ability to fill this space will depend on the level of rental and incentives offered.
Corporate Centres One and Two at Bundall are currently for sale by an expression of interest campaign which closed in late October.
Along with the two towers, which provide a total net lettable area of 19,565 square metres, there is also approximately 15,500 square metres of surrounding development land purchased in 2007 at a price of $106 million.
Other A-grade office buildings up for sale include the 6,700-square-metre Austar Building in Robina, which was listed in July by owner BlackRock with a $40 million price tag, following an unsuccessful attempt to sell the building in June 2008.
