Property Forecasting > Report
The Adelaide CBD office market is enjoying its lowest vacancy rate in
two years – although at 14.2% it is still relatively high. Falling vacancies
have allowed owners to slightly scale back A grade leasing incentives, in turn
translating into modest gains in effective rents. The outlook for the next few
years is for the recovery to continue, but it is likely to be slow progress.
Supply is picking up after two years of minimal net additions to stock.
Although we believe that demand will be strong enough to absorb new space over
the short to medium term, the reduction in vacancy rate is likely to be
gradual, with implications for leasing incentives and rents. Meanwhile, the
investment market continues to run hot and yields have recently matched record
lows. We judge the firming cycle to be not quite over yet, meaning further
capital gains to come.
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