Office market vacancy rate on Gold Coast soars higher after govt departments vacate space and large companies downsize

Thousands of square metres of space is empty in the wake of government departments vacating space and large companies downsizing.

The office vacancy rate on the Gold Coast is higher than six months ago.

THE Gold Coast office market has been struck a blow with thousands of square metres laying empty in the wake of government departments vacating space and large companies downsizing.

The Property Council’s executive director for Queensland, Chris Mountford, said the latest figures from the industry body, which show the office vacancy rate rose from 11.6 to 12.9 per cent for the six months to July, are “cause for concern”.

“We’ve witnessed a fairly consistent increase in vacancy levels on the Gold Coast across all office grades and in nearly all locations, with only b-grade space recording a modest decrease in vacancy,” Mr Mountford said.

“While we are a long way from the 20 per cent-plus vacancy experienced on the Gold Coast in the first half of this decade, any increase in vacancy is unwelcome news for the city’s economy.”

Jump! Swim Schools has vacated its space at 50 Cavill Ave, Surfers Paradise.

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The PCA report said there was negative net absorption — meaning the difference between office space being taken up and left vacant — of 6850sq m.

That amount of space would take up 80 per cent of the Seabank building in Southport, which the Gold Coast Bulletin calls home, and has 8547sq m of space in total.

Major vacancies were left by the following moves:

● Jump! Swim Schools vacating about 400sq m at 50 Cavill Ave, Surfers Paradise, after the business ran into trouble

● State Government’s Disability Services business being absorbed into the NDIA (agency implementing the NDIS) resulting in 2000sq m becoming vacant in Robina

● Gold Coast City Council vacating 730sq m in Robina

● Charity Mission Australia leaving 630sq m space in Southport

An artist impression of the planned Acuity Business Park, Robina.

OFFICE VACANCY INCREASES FOR FIRST TIME IN 10 YEARS

Tania Moore, who is joint managing director of Knight Frank’s Gold Coast office, said the first six months of the year was a difficult time for the ­market.

“The first half of this year was impacted by local businesses waiting on the outcome of the Federal Election and those in the banking and financial services sector making adjustments to their businesses after the banking royal commission,” she said.

Ms Moore said the vacancy rate for c-grade stock, which increased from 12.3 to 15.1 per cent, will continue to remain high as long as owners fail to refurbish their premises.

On the supply side, Ms Moore said a limited number of office spaces larger than 700sq m was holding back large groups from finding premises and cutting the vacancy rate in the process.

Exterior of the Seabank building on Marine Pde, Southport. Picture: Mike Batterham

$1.4B PROJECT IN DOUBT AFTER DEVELOPER COLLAPSE

The only substantial office project under way is the Acuity Business Park in Robina, which will deliver 5900sq m of space in stage one due for completion by August next year.

Ms Moore remains more bullish about the future prospects of the market.

“Businesses are already more positive and will likely expand and commit to more space, which should see vacancy decline,” she said.

CBRE’s director of office leasing Nick Selbie said the c-grade and d-grade office market sectors had continued to perform poorly.

“Many of the tenants in this category have undertaken a flight to quality to provide better staff amenity as well as a stronger client interface and image,” he said.

Landlords in the a-grade and b-grade market have supported this movement through the provision of strong incentives, which assist tenants through fit-outs and rental abatements.”

Mr Selbie said the large briefs taken to the marketplace, including Retail Food Group’s search for 2500sq m to replace its current footprint, were not able to be fulfilled in the current market.

Colliers Gold Coast’s Renee Hughes said she expected the market to improve during the next six months.

“The market was slower in the lead-up to the election and we do expect inquiry levels to rise as per normal for this time of year.”