The first phase of the impact of COVID-19 on Adelaide’s office market shows only moderate effects, reflecting steady base settings in the CBD at the start of the pandemic.
The Adelaide CBD office market vacancy increased marginally from 14.0 to 14.2 per cent – mainly due to supply additions – with the full COVID-19 impact yet to play out.
The city saw 11,530sqm of new commercial office space come online over this period. A-Grade office stock was again the most popular asset class, with vacancy dropping from 11.3 to 10.8 per cent in the six months to July 2020.
Office vacancies are calculated on whether a lease is in place for office space, not whether the tenant’s employees are occupying the space or working from home.
Property Council SA Executive Director Daniel Gannon remains cautiously optimistic.
“Adelaide has demonstrated over the past six months that it is a comparatively safe, healthy and resilient capital city, with a growing number of competitive national advantages,” he said.
“When it comes to which capital is Australia’s most liveable city at the moment, Adelaide wins hands down.
“Occupancy rates in the CBD are strong and increasing, businesses are building momentum and investors are still looking for reliable places to park capital.
“Market analysts will closely follow tenant demand and sublease vacancy over the next six months as the economic effects of the pandemic continues to play into office markets.
“If COVID is going to exert any upward pressure on vacancy rates, we won’t see that until 2021 and beyond.”
Mr Gannon said the Adelaide City Fringe also recorded an increase in vacancy from 14.2 to 14.4 per cent, primarily due to negative demand.
Australian CBD office vacancy increased from 8.3 to 9.5 per cent over the six months to July with flat – not falling – tenant demand.
Key market indicators, Adelaide CBD (aggregate)