Office vacancies the highest in a decade

Hobart’s CBD office market is facing the worst office vacancy rate since 2003, signalling a down turn of white collar employment across the CBD.

The Property Council of Australia (Tasmanian Division) Office Market Report released today revealed the office vacancy rate for the Hobart CBD to January 2013 had climbed to a ten year high of 9.4 per cent, up 3.5 per cent since 2012.

This data comes on the back of a raft of economic reports pointing to the hard economic times that the industry and the rest of Tasmania are experiencing, as well as the Property Council – ANZ Property Confidence Survey, which continues to highlight the State’s biggest private sector industry’s lack of confidence.

Property Council’s Tasmanian Executive Director, Mary Massina said the Office Market Report had reinforced the need for a microeconomic reform agenda and an understanding by Government of its ability to directly impact the office market through its decision making processes.

“There is an urgent need for the Government to work with the Property Council to maintain a sense of stability and confidence so this drop in demand doesn’t continue for another year and investors can have confidence in our capital city,” Ms Massina said.

Ms Massina said the headline figure of 9.4 per cent was of concern because it was driven by a drop in demand for space across all office Grades, excluding A Grade.

“There are four Grades of office accommodation surveyed in the Office Market Report with A Grade being high grade space, B Grade being quality space, C Grade of average quality and D Grade being inferior quality,” she said.

“The Survey revealed a 1.3 per cent increase in vacancy rates for A Grade property, with vacancy levels increasing from 3.6 per cent in 2012 up to 4.9 per cent in 2013.”

“For the lower grades of accommodation, there are worrying signs with vacancy rates of 17.8 per cent for B Grade an increase of 7.7 per cent, a 6.5 per cent increase to 14.2 per cent for C Grade, with D Grade up 1.2 per cent to 5.5 per cent.”

“This increase in vacancy rates is a huge concern because it comes on the back of a number of key economic indicators such as housing and commercial construction, which has seen a double-digit fall in the last 12 months, combined with the industry having the lowest confidence levels in the country.”

The property industry is calling on Government to act.

“The property industry is sick and tired of all talk and no action – we need to see significant reforms implemented to restore confidence across the private investment sector and drive a variety of jobs which are necessary for our economy,” Ms Massina said.

“We need investment and we need jobs and in order to have them, then we need significant microeconomic reform to stimulate and increase economic activity across Hobart and across the State.”
Mary Massina, Executive Director Property Council Tasmania