Demand for Canberra office space drives vacancy rate down, Property Council of Australia report

The Property Council of Australia's latest Office Market Report was released on Thursday, revealing the overall office vacancy rate in the territory dropped from 7.7 per cent to 6.2 per cent over the six months to February 2022.

Vacancy rates are calculated on whether a lease is in place, not whether the tenant's employees are occupying the space or working from home.

Canberra's vacancy rate is now the second lowest across Australia's capital cities and almost half the national average.

Meanwhile, Canberra's vacancy rate across premium, A-grade office space was just 2.4 per cent, the lowest of all capital cities.

Property Council of Australia ACT executive director Adina Cirson said it was pleasing to see such strong demand for Canberra office space, especially given the last two years of the pandemic.

"I think we've got a really positive story to tell. We're sitting second behind Hobart in terms of vacancy [in the capital cities] ... so to be ahead of the other major capital cities is a really positive sign," she said.

The ACT's strong Commonwealth employment base, which makes up about 50 per cent of office tenants, and long-term lease agreements were highlighted as key factors driving demand for office space.

Ms Cirson said the results demonstrate the resilience of the ACT office market and give confidence to those looking to invest in the nation's capital.

"The last six months have been a very positive period of investment for the ACT, we've seen some really big national players buying up big in the city," she said.

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More than $1.4 billion worth of commercial office real estate was transacted in Canberra last year, making 2021 the biggest year on record for office sales.

Among the most notable sales, Charter Hall and GIC acquired 50 Marcus Clarke Street for a record $335 million, while a government-leased office in Woden Town Centre sold for $84.6 million.

The ActewAGL building in Civic also changed hands in late 2021 for $76 million.

More than 116,000 square metres of office space is expected to hit the Canberra market in 2022, followed by another 26,400 square metres in 2023 and 8500 square metres from 2024 onwards.

Ms Cirson said more than half of the new stock coming into the market in 2022 is already pre-committed to incoming tenants.

"Anecdotally what we're hearing is that there are a few other deals on the table that are going to take up a large proportion of the remaining [office space] that just hadn't quite formalised in time for these results," she said.

"So the pipeline is there but certainly I think there's going to be a demand for more in the next couple of years in particular."

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