Gold Coast office vacancy lifted from 12.8% to 13% in the first half of 2020, with further increases likely to be relatively contained over the short to medium term. This is largely due to there being only one new supply addition of 5,900sqm in the next three months – the majority of which is already pre-committed.
This is unlike the lead into the GFC, where over 110,000 sqm of speculative new supply dovetailed with the market downturn. Furthermore, during the GFC, between 2008 and 2009, the Gold Coast recorded negative net absorption of around 6,000sqm, which showed the diversity of local SME businesses that adapted and pushed on.
Largely, the vacancy impact was driven by new supply additions, which is not a factor in the current market. The Gold Coast office sector is also supported by one third of its total supply being strata titled with predominant ownership via owner occupiers. This is due to the Gold Coast’s strong SME sector, which provides relative consistent stabilisation to occupancy levels.
We are seeing strong activity in the sub-200sqm market, with local businesses looking at both downsizing and expansion. New business enquiries are being fielded from the education and professional services sectors from the southern states and we have also seen some interest from Brisbane CBD professional service firms contemplating a shift of exposure.
The Gold Coast office sector is dominated by SMEs, with a heavy weighting of occupiers in the sub-200sqm range. The Gold Coast’s SME business operators are nimble and dynamic in their approach and their choice of a Gold Coast base is typically lifestyle driven. We anticipate the value proposition around lifestyle and wellbeing factors will play a critical role in future decision making for office requirements as enforced lockdowns eventually ease around the country.
The inherent nature of the Gold Coast office sector being spread across five distinct precincts spanning 17 kilometres has delivered the low-density live-work communities that is highly sought from those living in capital city markets. We expect the COVID-19 crisis is likely to accelerate existing employee-benefiting trends in the long term and lead to workplaces that are more social and healthier, in addition to offering greater flexibility. The Gold Coast is well placed to leverage off its natural attributes and the diversity of its mixed-use precincts.
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