New projects slated for region will exacerbate property shortfall
Office space is in hot demand on the Gold Coast with supply set to dry up in 2024 and 2025, according to the latest research from real estate firm Colliers.
While Colliers’ data indicated there had been an easing in the Gold Coast’s office vacancy rate over the six months to July, when it hit 6.3% (up from 6% earlier in the year), these conditions are not expected to last.
The Colliers Gold Coast Market Overview for the September quarter predicts a slew of new projects in the region will only exacerbate the problem.
Referring to the Gold Coast market overview, Colliers Gold Coast director-in-charge Steven King (pictured above left) said with vacant space of 29,157sqm currently remaining out of the Gold Coast’s total stock of 462,373sqm, the current take-up of space running at more than 12,000sqm a year pointed to a headline supply of less than three years for the Gold Coast office market.
“The Gold Coast remains one of the tightest office markets in the country, and despite a small uptick in vacancies in the last six months, the broader trend is for a continued tightening over the next few years,” King said.
“Given the limited supply expected over this period and continued strong demand, the vacancy rate really has nowhere to go but down.”
Colliers Gold Coast director of office leasing and investment services Bede Blatchford (pictured above right) said 50% of office demand in the last 12 months had come from existing Gold Coast occupiers who were expanding, with small-to-medium enterprises (SME) growing off the back of strong local economic conditions.
“Certainly, off the back of the pandemic in late 2020 and in early 2021, the influx in migration from NSW and Victoria meant there were a lot of new businesses coming to the Gold Coast,” Blatchford said.
“And whilst we are still seeing a bit of that, demand for office space from existing Gold Coast occupiers is predominantly the driving force behind the positive net-absorption of office space over the last 12 months, coupled by a dwindling supply pipeline that has been constrained due to rising construction costs.
“Subsequently, this is driving rental growth on existing office buildings.”
According to Blatchford there are a lot of corporate companies wanting to be in a regional market such as the Gold Coast, with many national and multinational companies looking at Gold Coast office accommodation due to lower occupancy costs compared to a CBD market, as well as the fact that it provides a lifestyle location and amenities.
“Looking forward we don’t see the [forecast] lack of population growth on the Gold Coast to impact growth in the office space sector,” Blatchford said.
New data from PropTrack, released last week, revealed the Gold Coast remains a hotspot for many overseas property buyers.
It was the second most searched location to buy in the country, and third most searched location to rent in the past three months.
The Colliers Market Overview also revealed that Vicinity Robina will be the sole provider of new office space on the Gold Coast for the remainder of the year, bringing 2,200sqm to the market which represents a third of the net absorption rate over the first six months of this year.
“Supply continues to be impacted by high construction costs, labour shortages and higher borrowing costs, and as a result we are not anticipating any new projects in 2024 and 2025, potentially leaving the Gold Coast market in its tightest position on record,” King said.
“The only other project of note is V & A Broadbeach, which is expected to deliver 5,500sqm in 2026 as many other proposed developments remain on hold for now.”
Overall, total office property sales on the Gold Coast in the first six months of 2023 hit $118 million, a figure boosted by the Gold Coast City Council’s $46.25 million acquisition of the Wyndham Corporate Centre building at Bundall, pushing the total higher than full-year sales for 2022.
However, the figure remains below the $382 million recorded in 2021 but is on track to be well above the 10-year average of about $130 million.
While the Queensland commercial rental market remains tight, the Real Estate Institute of Queensland’s latest Residential Vacancy Report shows residential renters in Queensland have more choices compared to a year ago.
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