- Data shows leasing conditions have improved for the fifth successive quarter
- The sub-500 sqm cohort received the highest levels of activity
- Enquiry levels in Q2 2022 are 94% higher than in Q1 2022
The nation’s capital continues to record improving leasing conditions following a fifth successive quarter of positive net absorption, according to recent JLL Research data.
The data also revealed the sub-500 square metre cohort has the highest levels of activity.
The findings may not be a surprise given the significant public service workforce in Canberra, which wasn’t as impacted during the early stages of the pandemic compared to other capital cities. The study also comes as a recent Property Council report noted the bounce back in the Australian office market.
Over the 2021/22 financial year, Canberra recorded positive net absorption of 25,3000 square metres. It also remains the tightest CBD office market with a 6.1% vacancy rate as of Q2 2022, one of the lowest in the world compared to other global cities.
“Canberra office demand has maintained its stability and remains the most resilient CBD office market in the country, which is largely due to its high proportion of public sector tenants, outsourcing opportunities for corporates and consultants and the secure income base that they provide,” said Andrew Balzanelli, Head of Office Leasing – ACT.
“The leasing market is typically quiet leading into an election; however, we saw particularly high levels of enquires generated in Q1 and Q2 this year, which will culminate in leasing activity in the later part of Q3 through to Q4.”
Andrew Balzanelli, Head of Office Leasing – ACT
For Canberra CBD tenants who came to the market in Q1, they are seeking around 21,965 sqm of space to occupy, significantly higher than in 2021. For Q2 this increases to 23,825 sqm of space, over double the amount for the same period last year.
“The sub-500 sqm market remains the most active within private sector activity with occupiers mostly seeking fitted space,” said Troy McGuiness, JLL’s Office Leasing Director.
“Enquiry levels in Q2 2022 are 94% higher than in Q1 2022, indicating that the ‘work from home’ model is still under review for many small businesses. Prime-grade owners are continuing to construct spec-suites across the market in a bid to capitalise on this.”
Troy McGuiness, JLL’s Office Leasing Director
Currently, there is a steady supply of new office builds in Canberra, coupled with strong demand. For all the current builds that are due for completion this year, the pre-commitment rate is 71%.
“While we will continue to see vacancy rates increase in early 2023, backfill space will continue to build momentum. Pending vacancy does not halt or stall activity but instead fuels demand, and we are seeing this with the revitalised Central Village which is generating significant interest,” added Mr Balzanelli
“Face rents have increased in prime assets; we could see upward pressure on incentives in 2023 as these backfill options become available in the later part of 2022.”
Aaron Green, JLL’s Office Leasing Director, added that increased expenditure from both the federal and territory governments has flowed through to the positive levels of demand since the pandemic began.
“Large government briefs continue to create development opportunities in the market. We witnessed an increase in demand from legal, IT and Defence related service providers, generating leasing activity.”
“The increasing government input in cybersecurity and military warfare will see an uplift in employment and in turn drive space demand for contract winners in the private sector, flowing through to positive levels of demand.”
