Green shoots of Gold Coast office market recovery: Savills

The green shoots of a recovery are emerging  in the Gold Coast office market, with leasing deals surging 62% in the 12 months to June.  

New figures from Savills's Gold Coast Office Spotlight report showed that in the 12 months to June, 13,015 square metres of leasing activity in the greater than 500 square metre space took place on the Gold Coast. That reflected a 62% increase on the 12 months prior, but was slightly down on the five year average of 13,179 square metres.  

The Gold Coast office market is made up of five office hubs- Southport, Robina / Varsity Lakes, Bundall, Surfers Paradise and Broadbeach, which combined make up  464,664 square metres of lettable space.  The biggest share of the stock is B grade, accounting for 39%, followed by C and D grade at 33%  

The report noted that unlike the nearby office markets of Brisbane and the Sunshine coast, office leasing had been quieter on the Gold Coast partly because its key industry - tourism - had taken a hit due to the high Australian dollar. Many local business interface with the tourism industry. Other traditional drivers for local businesses - strong population growth and construction activity- have also eased in recent years.

But Savills is expecting the 2018 Commonwealth Games to trigger increased activity. "Cities around the world have seen a pickup in activity three to four years out from a major event such as the games and it is expected the Gold Coast will be no exception", it said.

Improvements can be seen in the Property Council of Australia's July numbers, which showed the coastal city's vacancy rate narrowing to 19.9% from 21.5% a year  earlier.

While the market remains "patchy", Savills said there were signs of increasing activity and that demand could move up a notch at the end of the first quarter of next year.

The report highlighted that with a population now approaching, if not already at, 550,000 residents, there are some diverse industries and services emerging that stand the area in good stead for the future.

"Recognising the potential, some national and international firms have moved into the Gold Coast and more are expected as the international attention turns its focus onto the city as the Commonwealth Games get closer"'  Savills said.

"The start of an upswing in 2014 is definitely on the cards".