- Demand for secondary-grade offices in Adelaide CBD exceeds prime, impacting vacancy rates.
- Centralisation trend and preference for quality drive secondary office demand.
- Positive outlook with high net absorption and white-collar employment growth forecasted.
The demand for secondary-grade offices in Adelaide’s Central Business District (CBD) has surged, with vacancy rates now surpassing prime-grade vacancy rates, according to JLL Research; the trend has now persisted for three consecutive quarters.
Outperforming prime in Adelaide CBD
New figures from JLL Research highlighted the surging demand for secondary-grade offices in Adelaide; the secondary vacancy rate of 14.2% outstripped the prime vacancy rate by 4.2 percentage points.
Vacancy rate by grade
The prime vacancy rate of 18.4% is the highest since 1993.
Conversely, the capital city’s secondary vacancies reached their lowest point since 2012. Factors behind this trend include occupiers upgrading to high-quality B-grade offices and people preferring to work in the city centre instead of the suburbs.
“Businesses are actively opting for higher-quality B-grade spaces over lower-quality alternatives. Additionally, there is a noticeable trend of occupiers centralizing their operations from suburban locations to take advantage of the amenities, services, convenience, and transportation options available in prime central locations,” said JLL’s office leasing executive, Catherine Silverlock.
Net absorption by grade
It is important to note that the rise in prime office vacancies was also caused by a spike in new supply rather than falling demand.
Fully refurbished heritage property
Attesting to the popularity of Adelaide’s secondary-grade commercial properties is the freshly signed five-year lease agreement by marketing agency Village Gate for 79 Angas Street, a fully refurbished heritage property located in the Adelaide CBD.
“The leasing success of this property exemplifies the prevailing flight to quality trend in Adelaide’s office market. The building’s exceptional refurbishment, coupled with its distinctive heritage features, has set a new standard by becoming one of the most rapidly leased properties in recent times,” Silverlock said.
Village Gate’s new location will span 179 square metres (sqm), spread across two levels.
“79 Angas Street emphasises the thriving demand for secondary-grade office spaces in Adelaide, underscoring the importance for landlords to invest in refurbishment and repurposing their CBD assets to cater to the evolving needs of occupiers,” she added.
Village Gate managing director, Adam Ross, stressed the importance of finding an inspiring workplace for his brand.
“As an agency focused on visual and experiential branding, having a space that inspires staff and clients is integral to our culture and the exciting journey of our brand. The exceptional refurbishment and tasteful design of 79 Angas Street captivated us. The open-plan layout and abundance of natural light perfectly matched our requirements, making it an ideal choice for our expanding business,” he said.
Positive outlook for Adelaide CBD
JLL Research forecasted a positive outlook for Adelaide’s CBD office market. Net absorption was projected to hit a 15-year high, reaching 30,000 sqm in 2023. An expected increase in white-collar employment also aligns with this forecast.