Gold Coast office market set to tighten
- Colliers predicts the Gold Coast office vacancy rate will continue to tighten to 7% by 2023
- Rising demand for larger spaces indicates growing interest in the Gold Coast from big business
- Migration, growth in the residential sector and a tight labor market are all factors in the expansion of the office sector
Experts have predicted that the Gold Coast office market will tighten even further over the next 12 months as vacancy rates fall.
According to data from the Property Council of Australia, the Gold Coast’s office vacancy rate fell the farthest in 15 years in the six months to July, from 10.1% to 8.1%.
Commercial real estate company Colliers expects the vacancy rate to continue to fall, predicting it will reach around 7% by 2023.
Bede Blatchford, director of Colliers Gold Coast Office Leasing, said the market recovery was outpacing the rest of Australian capitals.
“Momentum has been building for a few years now, supported by strong demand fundamentals and a tight supply pipeline,” Blatchford said.
Non-central neighborhoods top most recent supply
According to Mr Blatchford, new supply in the main Gold Coast trading area remains tight.
However, there is new supply going on in non-core areas which is therefore not recognized by the PCA data.
“This will likely drive much higher activity in these non-essential PCA neighborhoods over the next 6-12 months as commercial occupiers turn to both lifestyle neighborhoods and locations that offer greater connectivity to Brisbane and the M1 Pacific Highway amid less availability within the PCA compound,” he said.
“This is particularly the case for occupants looking for serviced offices and a continuous space of 1,000 m² or more.”
Three new developments outside PCA’s central districts are due for completion this year and will provide an additional 11,800m² of office space to the market.
“With less than 6,000m² of available Class A office space remaining within the APC compound and continued demand after 6,901m² of positive net absorption in the first half of 2022, newly built will be a welcome relief to the market and go a long way to help meet tenant demand,” Blatchford said.
Demand for office space on the Gold Coast is increasing
Colliers said almost half of recent lease negotiations were due to local occupiers expanding or new businesses entering the Gold Coast market.
However, only 2% of negotiations were due to downsizing, which Blatchford says is a sign of confidence and reflects the importance of physical space for businesses.
Requests for spaces over 500m² have increased by 150%, indicating that large companies are looking for space on the Gold Coast.
“Traditionally the Gold Coast has been a small to medium occupier market, but that has changed a lot, especially since COVID.
“The market has largely benefited from the flow of people from the highway to the Gold Coast over the past two years.”
Blatchford Bede, Gold Coast Necklaces
Growth in the residential sector has also been an important driver of increased demand in the office sector.
“It’s a trend that is generating its own momentum with established businesses growing and national businesses expanding to the Gold Coast or building on their existing base in the city.”
The tight labor market is also working in favor of the office market, as employers place greater emphasis on the physical workplace as they compete to attract and retain talent.
“Situating an office in a non-CBD location where employees don’t have to make long commutes, while still having greater access to amenities, wellbeing and an overall enhanced lifestyle that the Gold Coast offers, is what employees are looking for in a post-COVID work environment,” Blatchford concluded.