This is Canberra’s largest office project under construction

It will be completed in Q4 2025. 

JLL recorded no office completions and no office withdrawals over the final quarter of 2024. There are currently seven projects under construction, 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 approximately 5,400 sqm of net absorption over Q4 2024, driven by small tenants (<1,000 sqm) expanding and relocating into the Barton precinct. The majority of positive quarterly demand was concentrated in prime grade space.

As a result, the Canberra prime vacancy rate decreased from 6.4% to 6.1%. The secondary vacancy rate also decreased marginally, from 11.9% to 11.8%, driven by small tenant leasing activity.

Prime yields remain unchanged over the quarter

Prime net effective rents decreased 1.5% over the quarter and have increased by 2.5% over the past year. Quarterly effective rent growth was driven by an uplift in face rents. Secondary net effective rents decreased by 1.8% over the quarter.

Prime yields in Canberra remain unchanged over the quarter, ranging between 6.50 and 7.75%. Secondary yields also remained unchanged at 7.75 to 10.50% over Q4 2024.

Outlook: New office completions in Q1 2025 to push vacancy upwards

It is projected that the vacancy rate in Canberra will trend upwards over the near-term, driven by the completion of 1 City Hill (33,000 sqm). At the time of writing, the project has secured no pre-commitments.

We believe the trough in prime yields was at the end of 2024. Smaller sub-AUD 100-million assets are expected to continue coming to market, as this is a palatable price point for private investors and boutique funds, which are the most active participants in the market.