The office market vacancy rate for Sydney CBD has increased for the second consecutive 6-month period from 5.6% to 8.6% in the six months to January 2021 due to limited demand. The forecast in the CBD office market is that vacancy will continue to increase throughout 2021 as businesses adapt and change their workplace strategies, looking at minimising their office requirements as a result. More sublease space has become available as a result.
The Melbourne office market continues to be impacted by the Covid-19 pandemic, despite the growth within the CBD office market prior to Covid-19, there was a significant rise in office vacancy in 2020. The true impact has yet to be seen on the market, given the tight lockdown restrictions in 2020 most deal activity was put on hold, and with very little deals transacting the impact on asking rents and incentives is yet to be seen. 2021 is starting to see an increase in tenant activity, and whilst its forecast that asking rentals will remain stable, incentives are expected to rise particularly in the 1,000sqm+ range as backfill space hits the market following the completion of several new developments.
Brisbane CBD’s vacancy rate, like other major markets continues to rise, increasing from 12.9% to 13.6% over the six months to January 2021. New workplace practises have seen tenants revaluating their current office size requirements in the new year. This has resulted in a large number of tenants handing back additional spaces or putting any excess space on the market for sublease. This is likely to continue over 2021, as businesses fully develop their ideal workplace office and working from home balance.
Vacancy in the Adelaide CBD rose from 14.3% in July 2020 to 16.0% as at January 2021. This was a result of both reduced tenant demand and an increase in new supply. While the Adelaide market has seen some cautious optimism return, major occupiers have looked to consolidate and rationalise their office space due to greater employee work from home flexibility. On the supply side, this was largely influenced from the completion of 108 Wakefield Street (14,500sqm), which began construction prior to the onset of Covid without any tenant pre-commitment.