Property
Issue No. 41 - June/July 2008
No (office) space to rent in this town
by Mr Kel Spencer
The Adelaide commercial property market is performing well due to stronger than anticipated demand for office space.
There is a large pool of investors seeking the right opportunity to enter the market. With many buildings completed in the past 12 months, new supply continues to be a feature of the market. Several significant projects are expected to be completed over the coming 12 months, including City Central Tower 2 at 121 King William St, which was sold in February last year for a record $6,345/m².
Over the next 6–12 months it is likely rents will rise, especially in the secondary grade as more buildings begin refurbishment programs.
As new supply of commercial office buildings comes onto the market stock is enjoying strong pre-commitment and demand, resulting in fast take-ups and extremely high absorption levels.
In the six months to January 2008, the Property Council of Australia reported 25,182m² of space absorbed while the 12-month net absorption figure was 45,561m². The average net absorption level over the past 10 years has been about 8,753m², which means the current levels of net absorption are almost 190% above the average.
City Central Tower 2 at 121 King William St, completed in February 2008, brings an extra 12,378m² of new space.
In recent times, investors have been able to step into the market and make the most of opportunities. This has mainly been due to the change in focus towards
the Adelaide market and the current strength of
the market.
Over the past nine months there have been some significant buildings released onto the market, such as 77 Grenfell St which sold for close to $50 million. Two other office buildings sold more recently include 75 Hindmarsh Square and 180 Flinders St. Selling for $21,760,000, 75 Hindmarsh Square not surprisingly attracted a lot of interest from investors with the building offering a long term lease to one of Australia’s largest radio netwo...
