Canberra to see 35,000sqm of new office space supply by Q4 2025

Thanks to a project under construction at 15 Sydney Avenue.

JLL recorded two office completions over the third quarter of the year, which were 21 Queen Victoria Terrace (8,000 sqm) and 23 National Circuit (4,610 sqm). There are currently seven projects under construction across the Canberra market, totalling 126,000 sqm.

“The largest project under construction is 15 Sydney Avenue (35,000 sqm), which is scheduled for completion in Q4 2025. The asset is fully pre-committed by the Australian Taxation Office (ATO),” the analyst said.

Here’s more from JLL:

Canberra recorded 24,900 sqm of net absorption over the quarter, driven by the expansion of large tenants (>1,000 sqm), particularly in the Civic precinct.

The Canberra prime vacancy rate decreased from 7.4% in Q2 2024 to 6.4% in Q3 2024, driven by positive demand. The secondary vacancy rate decreased from 12.0% to 11.9% over the same period, driven by the withdrawal of 7 National Circuit (2,200 sqm).

Prime yields remain unchanged over the quarter

Prime net effective rents increased 1.7% over the quarter and have increased by 3.8% y-o-y. Quarterly effective rent growth was driven by a solid uplift in face rents. Secondary net effective rents were up by 1.7% over the quarter, driven by face rent growth.

Prime yields in Canberra remain unchanged on the upper and lower range at 6.50 and 7.75% over Q3 2024. Secondary yield also remained unchanged at 7.50 and 10.25% over Q3 2024.

Outlook: New office completions to push vacancy upwards

It is projected that the vacancy rate in Canberra will trend upwards over the short term, driven by the completion of new office stock that has not secured any pre-commitments at this point in time.

We project that the trough in prime yields will be at the end of 2024, with some anticipated softening for lower-quality prime assets in town centre locations in Q4. Larger trades, above AUD 100 million, are not occurring as investors continue to grapple with pricing.