SA Launch Pad:
Market Analysis & Commentary
Market Analysis & Commentary
Despite a tough year for South Australia’s commercial property market, office vacancies in Adelaide’s Core remain tight, according to the Property Council's latest Office Market Report.
Vacancy in the Core market increased slightly from 5.5 percent to 6.1 percent in the six months to January 2010, driven mainly by supply additions of a little over 17,000 sq m.
According to Property Council South Australia Executive Director Nathan Paine, the low Core figure demonstrated ongoing confidence in South Australia’s economic prospects.
“While these results show a small increase in vacancy rates, in a historical context the Adelaide Core office market remains at very low levels,” Mr Paine said.
“In a national context, South Australia has the second-tightest office market in the country after Tasmania. But against our main interstate counterparts we are clearly leading the way."
“The slight increase in the vacancy rate has been as a consequence of supply additions but it’s fair to say that confidence in South Australia’s future is holding."
“We aren’t seeing a flight out of the central city area, traditionally the high-end of office rental costs, it’s actually been the opposite with nearly 7,000 sq m of net absorption."
“On top of that there’s little additional space coming on stream in the Core in the near future, which bodes well for vacancies to continue to hold or to even fall in the next 12 months.”
Key market Indicators, Adelaide Core January 2010
However, results for the Frame and Fringe were mixed. Vacancy in the Frame increased from record lows to its highest level in over a decade and reached 12.7 percent over the period, while the Fringe remained low at 3.4 percent.
The increased vacancy rate in the Frame was the result of the addition of more than 25,000sqm of stock and negative net absorption. In addition, further stock additions in this market over the next two years have the potential to put further upwards pressure on vacancies.
However, Mr Paine says ongoing tightness in the Core and Fringe markets should see this excess space absorbed. Coupled with the comparative strength of the state’s economy, the overall prospects remain positive.
"I have no doubt that the state’s economy will remain strong, and that will cause business to gravitate to Adelaide,” Mr Paine said.
“Some areas are tightly held, and others not so. In the tight areas, optimism will cause businesses to hold on, and vacancies will be gobbled up quickly when global economic conditions translate into even more activity for our growth industries.”
Video Highlights - Adelaide Core Round-up
Market commentary with Adam Learmonth, Director, Anvil Capital
Action Maps: 2009 Supply Additions
New Developments Full Refurbishments
Click here to view South Australian supply additions in a larger map.
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Nathan Paine, SA Executive Director, 0448 445 177
John Nguyen, National Research Manager, 02 9033 1943, 0410 449 210