Gold Coast commercial property: Office supply rapidy drying up with few new buildings under construction

A critical piece of the Gold Coast will be totally dry within two years according to a shock report which warns something big must change if the city has any hopes of turning the trend around.

The Gold Coast’s office market supply will all but dry up in 2024 and 2025 as the city’s new project pipeline comes to a standstill, a report by Colliers reveals.

The report shows the vacancy rate actually eased slight, rising from 6 per cent to 6.3 per cent during the past six months but the report reveals it will plummet again soon.

Colliers Gold Coast director-in-charge Steven King warned a lack of new office projects will put pressure on the market going forward.

“The Gold Coast remains one of the tightest office markets in the country, and despite a small uptick in vacancies in the last six months, the broader trend is for a continued tightening over the next few years,” he said

“Given the limited supply expected over this period and continued strong demand, the vacancy rate really has nowhere to go but down.

Colliers Gold Coast director Steven King.

“Supply continues to be impacted by high construction costs, labour shortages and higher borrowing costs, and as a result we are not anticipating any new projects in 2024 and 2025, potentially leaving the Gold Coast market in its tightest position on record.”

The report reveals:

* A-grade office buildings have the lowest level of vacancy, reaching just 4.6 per cent.

* The largest supply increase was found in Robina-Varsity Lakes where more than 6820sq m was added the past six months.

Long-term data shows the contracting vacancy rates in recent years as construction of new office buildings has essentially ceased.

In January 2021 the vacancy rate hit 14.3 per cent amid the pandemic and widespread office closures.

The Property Council of Australia’s 2022 Mid-Year Office Market Report showed office vacancies had fallen from 10.1 per cent in January that year to 8.1 per cent by July.

Construction is booming for units. Not so much for office buildings. Picture Glenn Hampson

Vacancy rates and previously gone as low as single-figures at the height of the 2000s development boom between 2004 and 2008 despite the massive increase in commercial space in Robina, Varsity Lakes and Southport.

However this dropped off dramatically after the global financial crisis saw a large number of companies fail.

At least three new towers with large amounts of office space have been proposed in the past two years but none are yet to be built.

A Melbourne consortium announced plans to build a 60-storey office supertower as part of a Southport development which will include Australia’s tallest residential tower.

The tower, which is yet to be approved by council, is expected to have more than 12,000sq m of office space.

Another office tower proposed for Southport’s Ferry Road has failed to eventuate, as has one planned for the former Town and Country site in Nerang.