Property Council laments lack of room for new business in Hobart CBD

Predictions of a glut of CBD office space as employees turned to working from home because of the Covid pandemic have not eventuated, new figures reveal.

HOBART has a severe shortage of office space with the tightest office market of any capital city in Australia.

The lack of office space is said to be holding back businesses and professional people relocating from interstate.

The prediction that there would be a glut of office space as many employees turned to working from home because of the Covid pandemic has not eventuated.

The latest Property Council of Australia figures for November show office occupancy in Hobart sits at 92 per cent.

Darwin has the same occupancy level, while Melbourne is at 12 per cent, Sydney 23 per cent, Canberra 17 per cent, Brisbane 63 per cent, Adelaide 73 per cent and Perth 77 per cent.

Council executive director Rebecca Ellston was concerned there were no new office developments being built or planned.

“We’re open for business, but there’s nowhere to put them,” Ms Ellston said.

“The 2021 Property Council Office Market Report for Tasmania revealed Hobart has the tightest office market of any capital city in Australia with the market tightening significantly due to tenant demand in recent years.

“While the statistics demonstrate the resilience of Tasmanian businesses and highlights the importance of the CBD to Hobart’s recovering economy, it’s important to start looking at how we can continue to ensure supply matches demand.

“We can expect tight conditions to continue, with very little new office space in the pipeline.”

Property Council of Australia executive director Rebecca Ellston on the Hobart waterfront. Picture: Eddie Safarik

Richard Steedman, a partner at Knight Frank real estate who specialises in commercial and sales leasing, confirmed there was a shortage of office space.

“The market is very tight,” Mr Steedman said.

“Since Covid there is clearly more flexibility and people may work one or two days at home now, but they still require office space.

“In January this year the vacancy rate was 5.1 per cent and I expect that will be reduced further when the figures come out in January next year.

“It is hard for businesses who want to relocate to our market.

“Tasmania is seen as a safe place to do business. If you have a call centre here, there is less risk of it having to close because of Covid.”

Mr Steedman is also worried about future demand.

“It’s expensive to build in Tasmania and there are not many, if any, new office buildings.

“It’s supply and demand, and demand is outstripping supply.”

As well as governments using office space, he said he had clients keen to set up offices in Hobart.

“It’s not just the top end of town where there is a shortage, it’s across the board,” Mr Steedman said.

“You might have an engineer who wants to relocate from Sydney or Melbourne and wants to work for five years but can’t find an office.

“It is hard to find a single office for a psychologist too.”

Commercial property agent Heather Mason says landlords will hold most of the power when leases are renegotiated.

Heather Mason from Devine Property has worked in commercial property for 17 years and says it is hard to find office space.

“Agents see ebbs and flows and the reality is it is very tight now,” Ms Mason said.

“There is no office stock hitting the market and I don’t know where new stock will come from.

“The power will be with the landlords when leases are renegotiated with tenants.

“Some people thought after Covid that office space would be relinquished but we’ve not seen that happen.”

Ms Mason is keen for a solution.

“We need to talk about what will happen in the next two to three years because no new developments are planned,” she said.

“We might have to push for the state government to look at moving some departments that don’t need to be in the CBD out of the city.”