Market reports

With a very strong economy Western Australia continues to provide aopportunities for employment growth with over 45% of goods exported from WA 2021-22. The State contributed 16% to the national economy with 10.7 % of the population and population growth is starting to increase again and is expected to further escalate as migration rates pick up both from interstate and overseas.

As Melbourne’s office workers continue to lag the rest of the country in returning to the CBD office environment, the vacancy rate of the CBD continued to increase to 14.8% as of July 2022. This high vacancy rate continues the recent trend, with a significant supply of new Premium and A-Grade space in the last two years and new supply coming in 2022 and 2023 contributing to expectations that vacancy rates will continue to rise before gradually declining.

Brisbane CBD’s vacancy was the only CBD, along with Adelaide to decrease over the 6 months to July 2022, decreasing from 15.4% to 14.0% for a change of 1.4%. Brisbane has seen the strongest demand for office space, at a rate of more than three times the historic average. The appetite and a flight to quality seen at the start of 2022 has continued with several pre-commitments to future developments transacting.

Brisbane CBD’s vacancy experienced an increase overthe 6 months to January 2022, increasing from 13.5% to 15.4% for a change of 1.9%. Although the first 6 months of 2021 saw an uptick in the
leasing activity, transactions in the second half dropped off significantly as the Omicron variant forced workers back to working-from-home full time and put a hold on major leasing transaction activity. The start of 2022 has seen a growing appetite and a flight to quality with several pre-commitments to future developments.

As Melbourne’s office workers continue to re-adjust to a return to the office environment post pandemic, the vacancy rate of the CBD continued to increase slightly to 11.9% as of January 2022, with supply of space contributing to the rise from 10.4 percent in July 2021.

As anticipated, we saw an increase in the overall office market vacancy rate for Sydney CBD increase to 9.3% making this the highest vacancy rate for over the past decade. With the end of lockdown, we have seen an increase in the level of leasing activity pick up in the marketplace.

Auckland CBD’s vacancy rate has gone against the trend of increasing since early 2020, currently sitting around 10.0% overall, from 11.9% as at July 2021. Whilst the pandemic shifting nature has caused an increase in work-from-home and has prohibited offshore business partners from travelling to New Zealand, there is evidence to suggest that the outlook for 2022 is likely to involve an office presence for many businesses. Especially once international travel recommences.

With Western Australia experiencing a limited downturn because of the pandemic, the vacancy rate has continued to decline from 16.8% as of July 2021 to 15.0% in January 2022. A reduction of 1.8%, continuing from the 3.1% drop in vacancy experienced in the first half of 2021 which was for that period the largest decline in the vacancy rate experienced in Australian CBD markets in 2021. The vacancy rate as of July 2021 has been reduced by a mixture of higher net absorption and withdrawal of stock.