RENTAL rates for the city’s offices, particularly a-grade space, are tipped to tick upwards this year as limited new supply continues to keep a lid on the vacancy rate.
Significant sales included Zupp Property Group snapping up the half-decent 140 Bundall Rd building in Bundall for $7.05 million in August and an Australian Unity fund buying the Eye Centre in Southport for $17.5 million in October.
There have been big leasing deals too.
Gold Coast Innovation Hub signed a five-year lease in June for 1822sq m of space over three levels at The PC building in Robina at $360sq m net.
Late last year Wiltshire Family Law signed a 10-year lease at approximately $428sq m for 700sq m in Benowa.
Despite some strong leasing activity, the vacancy rate blew out to 12 per cent form 10.6 per cent for the six months to July, according to the Property Council.
The first increase in the vacancy rate in more than eight years was driven by Foxtel reconfiguring its Gold Coast operations at Robina and the release of the second stage of Lakehouse Corporate Space, Robina.
However, CBRE office leasing director Nick Selbie said he did not expect the vacancy level to stay at the 12 per cent level, forecasting it to come in at around 10 per cent when the latest figures were issued next month.
“We have seen a positive uptake across A-grade assets such as 50 Cavill Ave, which is now 98 per cent occupied,” he said. “We expect that to continue into the coming year.
“There has been limited supply during 2018 and there is little on the horizon in 2019 as well so we expect the vacancy rate to become tighter in the first half of the year until 2020 or 2021.”
Mr Selbie said there were several large “design and construct” requirements in the market, which may add to supply.
He predicted rents to “tick up a bit” and incentives to come back.
Cushman & Wakefield sales and leasing associate director Ed Howard said there would be no dramatic change in the vacancy rate, forecasting a small reduction.
He said the so-called “flight to quality”, which saw landlords upgrade office space in lieu of new supply coming to the market, would continue.
“I can see rents for A-grade space going up a bit. I can see the lower grades steady or maybe dropping off a bit.”
Mr Howard said incentives would be revised to attract more tenants to A-grade space.
James Crawford, who heads up the investment services division for Colliers International on the Gold Coast, expects transaction volumes to increase this year.
He said the office precincts to watch include Southport and hubs in the northern corridor.
The city’s corporate tower of power, 50 Cavill Ave, is the year’s sale campaign to watch.
Owner GDI Property Group is looking for $100 million for the asset it purchased for $48.75 million in 2016.
Alister Thomson, Gold Coast Bulletin 18 January, 2019
