Adelaide’s CBD office vacancy rates drop, no longer worst in the nation

More workers appear to be ditching the comfort of working from home and opting for the CBD, with the city’s office vacancy rate no longer the nation’s worst.

Adelaide CBD skyline. Picture: JLL

Adelaide’s CBD offices are being sought after by major companies, helping lower the city’s office vacancy rate from a national high of 19.3 per cent to 17.5 per cent.

The Property Council’s latest office market report revealed Adelaide, Brisbane and Sydney were the only capital cities to record a decrease in the six months to July.

The report, released twice a year, stated Melbourne had the nation’s highest vacancy rate rising from 16.6 per cent to 18 per cent, due to new supply of premium offices.

Workers are beginning to flock back to Adelaide’s CBD ditching the comfort of WFH. Photo by Kelly Barnes

Meanwhile, the national office vacancy rate fell from 14.8 per cent to 14.6 per cent – however, it was still more than 4 per cent above the national average.

Adelaide’s drop was driven by strong demand from new tenants, such as SA Police, KBR Engineers and the Australian Aviation Agency, and no new supply coming onto market.

While the rate was still above pre-Covid levels of 14.2 per cent recorded in January 2020, the CBD had topped the nation with the highest vacancy rate earlier this year.

Adelaide Economic Development Agency’s general manager Greg Ratsch said there had been “significant growth” in office supply since Covid, “which reflects the confidence developers have to invest in the city”.

“We know sustainability, workforce attraction and high-quality amenities are both key drivers for companies and organisations that are seeking office space in the CBD,” Mr Ratsch said.

“While flexible working conditions continue, office attendance in Adelaide remains second highest in the country at approximately 88 per cent.

“Meanwhile, the total number of jobs has grown, with the number of people working in the city now 19 per cent higher than pre-Covid.”

Adelaide CBD luring workers back to the city. Picture: Emma Brasier

Property Council SA deputy executive director Richard Fowler said office demand was almost 600 per cent above the historic average for the Adelaide CBD.

“There’s 600 reasons to feel cautiously optimistic about Adelaide’s office market environment, despite some of the obvious challenges facing the sector and the economy,” Mr Fowler said.

“Record office demand is yet another indication South Australia’s economy is match fit after ranking first for three consecutive CommSec state of the state’s report.”

On Monday, CommSec rankings listed South Australia as again being the nation’s top performing economy, based on its performance in jobs, housing and construction.

Property Council of Australia chief executive Mike Zorbas said there was room for “cautious optimism” following the release of latest figures.

“In the last three years, four of the six reporting periods have recorded positive demand for office spaces in our CBDs,” Mr Zorbas said.

“In Adelaide and Brisbane, demand is currently 5.9 and 2.7 times their historical averages, respectively,” Mr Zorbas said.

“We continue to see a preference for high-quality office spaces, with Sydney and Adelaide being the only capitals to record higher prime vacancy than secondary vacancy.”