H1 2012 saw CBD office space demand almost double that of the 20-year historical average, but demand is mostly concentrated in Perth and Brisbane, said the Property Council of Australia (PCA).
In its latest Office Market Report, PCA highlighted that although strong demand was seen for CBD offices in the first six months of the year, activity was mostly dominated by the resource-driven capital cities of Perth and Brisbane.
Demand for CBD offices almost doubled the 20-year historical average over the first half of the year, said PCA, which calculated net CBD absorption at 243,000 sq m compared to a 20-year historical average of 120,000 sq m. Net absorption is defined as the amount of space leased minus the amount of space vacated over a given time-frame.
Of the 243,000 sq m absorbed from January to June this year, nearly half - 115,000 sq m - was absorbed in the Perth CBD, with the Brisbane CBD absorbing a further 40,000 sq m. In total, Perth and Brisbane accounted for 68% of all office space absorbed.
Notably, Brisbane CBD's absorption was just behind that of the much larger Sydney CBD, which absorbed 45,000 sq m. The weak Melbourne CBD market managed to absorb 34,000 sq m.
While vacancy in Perth increased from 3.3% to 4.2%, the city remains the tightest CBD office market by far. This was despite a jump in available CBD space following the completion of City Square, a 45-storey office tower in Brookfield that was launched in June, adding 85,000 sq m of office and retail space to the market.
City Square is anchored by mining giant BHP Milliton, which took up 60,000 sq m of space.
In its report, PCA noted a "spectacular" 12% net increase in occupied stock in the Perth CBD, indicating record supply and demand."
In fact, Perth's net absorption was eight times higher than the city's historical average," noted the PCA.
For H1 2012, the Perth CBD also posted the highest demand rate (amount of space absorbed as a portion of total stock) of all CBD markets surveyed of 8%, the report adds.
"The hard economics of the resources boom is tellingly reflected in the relative performance of the nation's office markets."
Australia overall vacancy rate remained almost unchanged at 7.8%, slightly down from 7.9% in January this year, and at its lowest level since 2009.
Tags: Office for lease, Commercial real estate