Adelaide CBD Today
The final stop of the Corenet Global State of the CRE markets journey this year was Adelaide. Panel members were Zandra Savvas, Director of Tenant Representation at CBRE, and Rick Warner, Director of Research at JLL. As always great panel, great audience, and great insights.
Adelaide CBD is a neat and tidy, rectangular shaped, gridded office market with main public transport thoroughfares running through the middle. It is relatively isolated from the vagaries of the other capital cities, and is not known as an institutionally based commercial real estate market. The majority of owners are privates with a sprinkling of REITS, not the other way around.
The general statistics for the Adelaide CBD office market at the moment are
- Size is approximately 6% of the total Australian Office market and about a 3rd of the size of Melbourne or Sydney
- Vacancy is 16.4%, down from 17.5% in mid-2024 and a peak of 19.4% in Jan 2024
- New Supply for 2025 will be approximately 30,000 m2 – around 2% of total market
- Absorption for the 2nd half of 2024 was positive 22,606 m2 following a very healthy positive 29,041 m2 for the 1st half of 2024 – proportionately better than any other capital city
- Absorption: 6 month net absorption average in the 5 years to January 2020 was positive 4,511 m2
- Absorption: 6 month net absorption average in the 5 years since January 2020 has been positive 7,923 m2 – better after Covid than before and the only capital to do so
Last year we commented “the market is made up of a very high proportion of smaller tenants (and private owners). As a result, the market has to work harder to secure every single tenant. We think this makes the market more mature and competitive. This competitiveness breeds resilience and a better understanding of what it takes to keep or attract tenants.” We believe this is even more evident in 2025.
Our takeaways from the panel and other discussions are:
- The vacancy figures are not a true reflection of the actual market – there is an inherent structural long term vacancy in the lowest grade properties.
- Economic rents for new buildings are high, but the gap is not like Sydney or Brisbane.
- Tenants are seeking more flexible lease terms due to the uncertainty permeating in the market.
- Ready-to-build industrial land is a major issue and will continue to be for some time.
- Adelaide is in a healthy spot.
It’s always refreshing to listen to the way the market approaches office space before, during, and after a panel. We think Adelaide is better placed than the other capital cities for what lies ahead in the office world.
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