Demand still growing for Wollongong office space

Demand for office space in the Wollongong CBD rose over the past year, pushing the vacancy rate to its second lowest level on record, according to the Property Council of Australia’s latest Office Market Report.

Chair of the Property Council’s Illawarra Chapter, David Laing, says the January 2012 figures present a tale of a healthy market.

“There is continuing demand for office space in the CBD, and we need to be able to deliver it,” Mr Laing says.

“The net absorption across the CBD was 3,629sqm over the past 12 months, and vacancy rates fell from 9 percent to 6.5 percent.”

“A marginal increase in the vacancy rate in A Grade stock, from 0.4 percent to 0.6 percent, is effectively immaterial given the overall tight conditions.”

B Grade office space absorbed an additional 2,961sqm in net demand over the period, more than halving the vacancy rate from 17.7 percent to 8.1 percent.

C Grade demand rose by 1,016sqm and, in doing so, cut the vacancy rate from 15.9 percent to 13.6 percent. D Grade posted net absorption of -198sqm and saw vacancy tick up from 8.2 percent to 12.1 percent.

There is no additional supply due to come online in 2012 and 7,000sqm is due in 2013.

“These figures constitute a show of faith in the region’s economy,” Mr Laing says.

“We are also seeing investment in broader projects like the renewal of Wollongong and Shellharbour city centres, West Dapto and Calderwood, Port Kembla and the Innovation Campus.”

“These large projects have a life of their own, but we need to convert small- to mid-sized opportunities that have planning approval but lack capital.”

“We need a clear investment attraction strategy that reaches beyond the escarpment and helps secure the pre-commitments that will underpin the next wave of projects.”

Mr Laing says he looked forward to the Property Council’s Illawarra Outlook lunch on Friday, February 10, at the City Beach Function Centre, where the results will be delivered in a broad property perspective.

Speakers for the Illawarra event are Commsec Chief Equities Economic Craig James, MMJ Director Geoff Jones and Wollongong City Councillor Ann Martin.

For more information contact:
David Laing, Chair, Illawarra Chapter, Property Council
Ph: 0419 284626

John Nguyen, National Research Manager, Property Council
Ph: 02 9033 1943 or 0410 449 210

Headline comments: 

• Total vacancy decreased in the Wollongong market over the year to January 2012 to its second lowest level on record, due to positive demand 
• Only the B Grade segment experienced significant demand over the period

Vacancy analysis: 

• Total vacancy decreased from 9.0 percent to 6.5 percent in the year to January 2012 
• This is the second-lowest vacancy since the Office Market Report began tracking the market in 2008 
• The vacancy decrease was due solely to net absorption of 3,629sqm 
• There were no supply additions or withdrawals over the period 
• Only B Grade experienced significant positive demand over the period

Future supply: 

• No space is due to come online in 2012, but 7,000sqm will be introduced in 2013 
• 18,950sqm of space is mooted

Key market indicators, Wollongong (aggregate)

For full analysis and coverage, visit the dedicated website: www.officemarketreport.com.au