Adelaide has continued to strengthen its investment and development sectors as the CBD experiences its lowest vacancy in more than five years.
Oil and gas group Beach Energy has recently moved its headquarters into the refurbished 80 Flinders Street office tower, following its acquisition of Lattice Energy. The move from its 23-year-long previous home in Glenside is significant as it’s part of a growing trend bringing high-profile businesses into the CBD. The Property Council of Australia has revealed that Adelaide CBD vacancy rates are down to 12.8% in July, as compared to 14.2% in January earlier this year.
JLL's head of office leasing in South Australia, Tom Budarick, has attested that vacancy is expected to continue to fall over the next year.
“The demand for modern office accommodation from the defence sector cannot be understated. There are a number of deals from defence-related occupiers that will boost absorption in the second half of 2019.”
Modern towers are the more sought-after, with those constructed after 2006 presenting a vacancy rate of less than 3%.
James Young, Colliers International director of office leasing, told the Australian Financial Review that he expected a ''further tightening'' in vacancy rates over the next six months. Mr Young has tipped CBD vacancy rates to drop to 11.5% by January next year.
The growth of confidence in South Australia’s business sector is leading the nation, revealed in a recent NAB Business Survey.
The independent monthly survey showed business confidence in South Australia rose 7 points last month, with New South Wales and Western Australia following by an increase of 3 points.
The establishment of the Australian Space Agency at Lot Fourteen and the $551 City Deal supporting innovation, research, entrepreneurialism, technology and the arts at the old Royal Adelaide Hospital site have been major catalysts for investment and confidence.
The presence of the Space Agency is set to favourably position local businesses to capitalise on the US$345 billion global space industry, with the agency aiming to create 20,000 jobs by 2030.
With vacancy falling and confidence continuing to rise, Adelaide is proving itself as an attractive investment destination. Singapore-listed property trust Suntec REIT, recently made their first Australian acquisition outside of Sydney and Melbourne, with the purchase of Adelaide’s Allianz Centre for $148.3 million. The sale marked the fifth office tower to sell for over $100 million in around 12-months.
Strong demand for quality office and commercial property is expected to translate into several new projects, which will see completion around 2022-2024.