Canberra CBD Today
The tour continues and last week’s CoreNet Global State of the CRE markets panel was in Canberra. Our panel members were Erin Tippett, Asset Manager at ISPT, Sean Ellison, Director Research at Cushman & Wakefield, and Troy Markos, Territory Director Office Leasing at CBRE. The discussion highlighted just how different Canberra is to the other major markets.
Canberra was planned around a hub and spoke system whereas the other capital cities have slowly evolved that way. The government occupies so much space that it is the driver of the market. It was the most resilient capital during Covid and since mid-2021 vacancy has remained below 10%; much lower than the other capitals.
The current status of the Canberra office market is:
– Vacancy 9.2% down from 9.5% in July 2024
– New supply approximately 100,000 m2 of space will be added to the market in the next 2 years – approximately 4%
– Absorption for the second half of 2024 positive 20,419 m2
– Absorption 6 month positive net absorption average in the 5 years to January 2020 was 1,516 m2
– Absorption 6 month positive net absorption average in the 5 years since January 2020 has been 15,481 m2
Our main takeaways from our time in Canberra;
- There is a slow and steady movement to the CBD away from the spokes
- Refurbishment of older buildings is proving successful – more competitive commercial terms than new buildings but the same amenity
- There are a few headwinds to come including the amount of new supply and when the older leases come up in the coming years, the real demand for office space taking into account current utilisation rates
These headwinds will take vacancy above 10% for the first time since 2021 and we believe it will remain there for a while.
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