Newcastle’s office vacancy rate has continued its long downward trend, falling from 14.5 per cent in 2010 to 7.1 per cent last year.
The vacancy rate of Newcastle’s most expensive A-grade office space dropped to just 2.8 per cent in 2018, from 6.4 per cent the year before, as vacancy rates for C- and D-grade offices grew.
The overall Newcastle office vacancy rate was 9 per cent last year.
The Property Council of Australia figures show the main reason for the drop in the overall vacancy rate was the more than 5000 square metres of older office space taken off the rental market.
But the Property Council’s Hunter director, Anita Hugo, said the relatively low vacancy rate suggested Newcastle’s economy was buoyant and there was demand for more office space.
“The vacancy rates compare pretty strongly across Australia, and specifically when you look at the A and B grades of office space it’s showing a strong desire to relocate or move into the city,” she said.
“It’s a lot to do with the urban renewal of the area.
“We’re seeing significant changes in the area.
“It’s about lifestyle, amenity … what are businesses looking at in attracting employees.
“We’ve gone through that urban renewal, and the demand for people to come in and use those spaces has really improved relative to that growth.”
The Newcastle vacancy rate was lower than in most capital cities except Melbourne and Sydney, whose ratio of empty CBD offices dipped to just 3.2 per cent and 4.1 per cent respectively.
Sydney’s vacancy rate was its lowest since the 2000 Olympic Games.
Canberra (11 per cent), Brisbane (13), Adelaide (14.2), Darwin (17.2) and Perth (18.5) had far higher vacancy rates than Newcastle.
The Newcastle Herald reported in June that more than 30,000 square metres of new office space was on the way in Newcastle West, including a Doma Group commercial building next to the interchange (16,000), the Birdwood Business Centre in Hunter Street (11,000), and the Gateway 2 building in Stewart Avenue (9000).
The City of Newcastle will be the anchor tenant in Gateway 2, and the state government has an agreement with Doma to rent out its office development, which will be the largest commercial building in Newcastle.
“There’s no pre-committed space in the pipeline from 2021 onwards, but there is potential for 15,000 square metres of new A-grade accommodation to be added if there was the tenant demand,” Ms Hugo said.
“If the people coming into the city improve that belief and perception and credibility of this as a place to live and work, then we can continue to see the use of that demand.”