Canberra office vacancy hits 12-year low of 7.6% in Q1
Thanks to robust positive net absorption and only one withdrawal.
Both the prime and secondary vacancy rate contracted over the quarter, says JLL. Prime vacancy contracted by 0.8 pps to 4.5%. This is the tightest prime vacancy recorded across the 19 office markets tracked by JLL. The secondary vacancy rate contracted by 0.2. pps to 13.3%.
There were no completions recorded this quarter, following the completion of Constitution Place Buildings A and B on London Circuit in 4Q20 adding a combined 32,600 sqm to Canberra's office market. However, one withdrawal saw Canberra’s office stock decline by 0.4% in 1Q21.
Here’s more from JLL:
Prime gross effective rents recorded a decline of 1.2% over the quarter. The decline comes on the back of incentives increasing by 1.8 pps to reach 23.0% in 1Q21. This is the highest prime incentive rate offered in the market recorded since JLL began tracking the market.
One transaction over $5 million was recorded in 1Q21. Capital Holdings sold 2 - 6 Shea Street in Phillip to a private Sydney family for $18.8 million.
Other key figures:
4,900 sqm Net absorption: Canberra’s office market recorded positive net absorption of 4,900 sqm in 1Q21. A number of large tenant leases totalling 14,300 sqm contributed to Canberra’s net absorption. The largest of these lease deals was for a Commonwealth Department.
84,000 sqm Construction: There were no completions recorded in 1Q21, and at present, no completions are expected in 2021. However, 3 Constitution Avenue, which is undergoing refurbishment, was withdrawn this quarter. As such, Canberra’s stock declined by 0.4% over the quarter to 2.12 million sqm. JLL currently tracks four new projects under construction with a combined office area of 84,000 sqm.
7.6% Vacancy: Robust positive net absorption, coupled with one withdrawal, resulted in headline vacancy contracting to 7.6% in 1Q21, down from 8.2% last quarter. The 1Q21 headline vacancy rate is the lowest level recorded in almost 12 years.
4.75-6.50% Yields: Prime yields remained unchanged in 1Q21 after compressing in 3Q20, and are currently at the lowest levels ever recorded by JLL. They currently stand at 4.75% - 6.50% with a midpoint of 5.63%.