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Buoyant Canberra office market tipped for 2017

The light rail has put Canberra on the map for property investors.The light rail has put Canberra on the map for property investors.

As 2016 draws to a close, Allhomes asks a range of commercial property experts to gaze into the crystal ball and provide their predictions for the new year.

Demand

JLL ACT managing director Andrew Balzanelli says sustained demand for office space is expected to continue in 2017.

“Market fundamentals have remained positive, while total vacancy has steadily declined to be the third lowest for all the national CBD markets at 13 per cent as of the third quarter,” he says.

“Prime-grade vacancy was the second tightest of all the CBD markets at 8 per cent. We expect these conditions to set the course for a buoyant and active 2017.”

Building pipeline

Knight Frank senior director Nicola Cooper says the building supply pipeline is minimal at present.

“Any new supply is substantially pre-committed, with just 30,707 square metres expected to be added to the market over the next 18 months – stemming from the completion of the Tuggeranong Office Park,” she says.

“There are a large number of projects in the pipeline but these will not be delivered before 2019.”

Rent

Colliers International director Tim Mutton says the pressure is on for rent increases.

“Positive net absorption of A-grade stock has seen a tightening of vacancy in the best buildings,” he says.

“It is only a matter of time until we see rents begin to rise.”

Mutton expects this trend to continue well into the new year.

Investment 

Quintessential Equity chief executive Shane Quinn says there is scope for further growth in 2017.

“Assets have traded at capitalisation rates that are attractive for both sellers and buyers alike, and as long as this relative equilibrium continues, it will be an attractive market to do business in,” he says.

“The city is increasingly attractive as an investment destination through more international flights and the forthcoming light rail system.”

Hot spots

Burgess Rawson managing director Guy Randell says there is a lot to be confident about in Gungahlin, and has a prediction on urban infill.

“Gungahlin is still experiencing strong growth and further mixed use, multi-unit developments will bring balance to the town centre to support the commercial offerings,” he says.

“I also predict there’s going to be a big increase in the adaptive reuse of inner city sites triggered by the lack of commercial land opportunities.”

Randell says hot spots will include Kingston, the city centre and Woden.

What this means for you Declining vacancy rates will be welcomed by landlords, however commercial tenants can expect to see rising rents in 2017.