The Newcastle CBD market has seen vacancy levels rise over the past 12 months to the highest level in 15 years, according to the Property Council of Australia’s latest Australian Office Market Report.
Demand for space has been placed on ice as office vacancy levels jumped from 10.0 percent to 14.5 percent over the 12 months to January 2010.
The continuation of tenants moving into higher A grade office space from the lower grades accounts for much of the vacancy rates. This is demonstrated by the negative demand for office space of –7,794 sq m, primarily in the lower grades, for the 12 months to January.
Over the past 12 months only 5,747sqm of additional office space entered the Newcastle Market, the vast majority of this was in A grade space. 1,886sqm of office space was withdrawn from the market in C and D grades.
C and D grade space both have much bigger vacancies of 17.5 and 26.3 percent respectively, which continues to be far higher than the national non-metro CBD figures.
It is important to note that current vacancies of A grade space represent only one year’s supply of office space, based on take up rates of the past last five years. With no new A grade supplies proposed and lead times up to three years for large scale projects, this could see significant undersupply in the near future.
Key market indicators, Newcastle (aggregate)
|
Grade |
Vacancy, Jan 10 (%) |
Vacancy, Jan 09 (%) |
Net absorption, 12 months to Jan 10 (sq m) |
Net absorption, 12 months to Jan 09 (sq m) |
|
A |
10.1 |
6.5 |
1,102 |
12,792 |
|
B |
14.7 |
9.2 |
-4,706 |
1,076 |
|
C |
17.5 |
12.2 |
-3,538 |
16 |
|
D |
26.3 |
25.0 |
-652 |
-1,083 |
|
Total |
14.5 |
10.0 |
-7,794 |
12,801 |
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