Property
Issue No. 52 - April/May 2010
Scant relief for tight office market
by Mr Kel Spencer
Australia’s unemployment rate was 5.3% in January, the third consecutive month Australia has seen a decrease in the number of unemployed people. This is fuelling optimism across the country.
South Australia recorded a 0.8% fall in the unemployment rate of 4.4% in January, the lowest rate across the nation. The beginning of 2010 will be vital to South Australia’s economy with the Adelaide Festival, the Fringe, Womadelaide, the Adelaide Cup and Clipsal 500 all injecting millions into the economy. This along with a lurking State Election is giving South Australia’s economy an exciting sense of optimism.
Since the commercial office market is highly influenced on a delayed basis to the traditional economic cycle, it only needs a small increase or a small decrease in vacancy rates to have a dramatic affect on values.
Vacancy rates have fluctuated across all areas of the office market, hence making a great impact on valuations.
There has been a small increase in vacancy rates, but historically they are still very low. Nationally, SA has the second tightest office market after Tasmania.
2009 was a hard-hitting year for the commercial office market. Despite this, office vacancies in Adelaide’s core remain tight. For 2009, total net absorption – which measures the change in occupied stock levels, was -14,800sq m, indicating more stock came online than was leased.
In the commercial areas that still remain tight , across Adelaide, optimism will cause business to hold on, and vacancies will be snapped up quickly when global economic conditions translate into even more activity for our growth industries.
In the six months to January 2010, the Property Council of Australia reported - 4608sq m of space absorbed within the Adelaide frame market. A Grade posted an increase in vacancy from 2.6% to 38.5%, driven solely by net absorption of - 4608sq m (Tables 2 & 3).
Tables 2 and 3 also show an increase in vacancy rates for th...
