Adelaide office market rebounds as tenants move to CBD
Demand for office space in Adelaide CBD has grown, with the capital shaking its title as the city with Australia’s highest office vacancy rate.
Property Council data released today shows the Adelaide CBD recorded an office vacancy rate of 17.5 per cent, down from a nation-high 19.3 per cent recorded in February.
The decrease in the vacancy rate was driven by 29,041 square metres of office space being absorbed by new tenants, in net terms.
Colliers national director of research Joanne Henderson said Adelaide had “the strongest net absorption of all the CBD markets”.
She said this was in part driven by office tenants moving from the suburbs to the CBD.
“In Adelaide, there was some really strong centralisation activity that occurred,” she told a SA Property Council event this morning.
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“SA Police, there was KRB engineers, Terratech and the Australia Aviation Agency all centralised from outside of the CBD into the CBD.
“And Adelaide also had some new space for expansion for the state government and also the English College of Adelaide.”
The July 2024 Office Market Snapshot, compiled by researchers at real estate agency Colliers, shows there is 1,563,717 square metres of office stock in the Adelaide CBD of which 273,391 square metres is vacant.
Melbourne now has the highest office vacancy rate in the country at 18 per cent.
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The vacancy rate outside the Adelaide CBD increased marginally from 11.1 per cent to 12 per cent.
The Adelaide CBD vacancy rate for A-grade office stock is still high at 20 per cent after a series of new developments, including a new office block at 60 King William Street, recently entered the market.
Henderson said she expected the A-grade vacancy rate to decrease as more tenants looked to move from lower-grade office stock.
“We have had that large supply pipeline come through in Adelaide, but tenants are upgrading and we expect to see that number to continue to decrease,” she said.
“There’s some positivity now starting to come through in the demand side and, across the market, more stability.”
SA Property Council deputy executive director Richard Fowler said the office market data was another indicator “of our economy’s health and that companies see the value of office space in Adelaide”.
“The metrics for Adelaide’s office market are trending in the right direction with vacancy down and demand up,” he said.
“Adelaide has now passed the office vacancy torch to Melbourne and taken gold in terms of demand for space with it being six time above the historic average.”
