Adelaide CBD office vacancy declines
New office market data shows vacancy rates in the Adelaide CBD are falling to levels nearing the national average.
Having earlier this year recorded the highest level of office vacancy of any capital city in the country, Adelaide’s CBD office vacancy rate has fallen to 15.8 per cent.
Adelaide’s rate is now near the national CBD vacancy rate of 15.1 per cent, with the city recording 20,400sqm of net absorption over the third quarter.
Over the 12 months to September 2024, Adelaide recorded 37,700sqm of net absorption.
JLL said Adelaide was a significant contributor to the national positive net absorption of 91,900sqm in the September quarter – the strongest quarterly result since the third quarter of 2018.
The South Australian capital has emerged as “one of the most resilient markets in Australia” according to JLL South Australia director of research Rick Warner.
You might like
“The headline vacancy rate in the Adelaide CBD has decreased for three consecutive quarters, driven by continued occupier demand for modern, efficient office accommodation,” he said.
“The positive trends in Adelaide align with the national narrative of organisations recognising the importance of quality office space.”
JLL South Australia head of office leasing Tom Baudarick said the public sector drove much of the city’s leasing activity.
“Along with the continued opportunistic upgrade relocations from businesses, a key thematic in Q3 2024 was activity from public sector departments, with a number of government agencies leasing space this quarter.”
Stay informed, daily
Nationally, JLL head of research Andrew Ballantyne said the strong net absorption rate in 3Q was “partly a sharp reduction in sublease availability”.
“Australia’s economy has slowed in 2024 and a slowing economy is normally associated with increased sublease availability,” Ballantyne said.
“However, a reduction in sublease points towards higher utilisation and organisations requiring additional office space to accommodate workforce requirements.”
The news follows data released in February showing Adelaide had the highest rate of office vacancy of any CBD in the country.
The Property Council at the time said office vacancy in Adelaide was at 19.3 per cent at the end of 2023, attributing the high rate to the “flight to quality” trend, meaning more businesses were moving out of older buildings and into newly built stock.
JLL said the quality story remained a “strong theme across the Australian office sector”.
“Prime grade net absorption was 83,300sqm in 3Q24, while secondary was 8,600sqm,” JLL said.
“Over 2024, prime net absorption across CBD office markets has totalled 159,600sqm.”
JLL head of office leasing Tim O’Connor said companies were looking for a “well-designed workplace”.
“For most organisations people and technology are their two main fixed cost. Real estate is a lower order cost, but a well-designed workplace can play an important role in the attraction and retention of knowledge workers,” O’Connor said.
“The quality story is not simply a prime versus secondary discussion. The secondary grade market is not homogenous and those well-located assets with a diverse range of amenities are receiving strong tenant enquiry.”
