2022-03-30-莱坊-Adelaide_Office_Market_March_2022_8页_7mb

Adelaide CBD Office Market Summary (March 2022)

Core Market Overview

The Adelaide CBD office market has demonstrated resilience against the impacts of the pandemic, with strong demand and minimal vacancy rates in new generation prime stock. The overall vacancy rate decreased from 15.7% to 14.5% over the past six months, with a notable decline in new generation prime buildings (built 2006+), which saw a reduction in vacancy and incentives.

Key Market Indicators (as of January 2022)

Demand Trends

• Strong tenant demand: Tenants are increasingly seeking new generation prime stock, with a preference for smaller, more efficient floor plates.
• Large tenants active: Major tenants such as Commonwealth Govt. Services Australia, DFIT, and Flinders University have made significant pre-commitments, particularly in new developments.
• International interest: The Adelaide CBD continues to attract interest from international and blue chip companies, including Accolade Wines and the Department for Infrastructure and Transport.

Rent and Incentive Trends

• Rents on the rise: Average gross effective rents increased by 2.9% for prime and 1.7% for secondary assets in the past year.
• Incentives stable: Prime incentives remained at 30.7% and secondary at 35.5% as of January 2022.

Supply Outlook

• No new supply in 2022: The market recorded no new supply as of January 2022, but several major developments are under construction or in the planning phase.
• Forecasted supply:
  • 2023: 116,500 SQM
  • 2025: 20,000 SQM
  • Mooted supply: 77,610 SQM, subject to tenant pre-commitment

Major Developments

• 60 King William Street: 40,000 SQM (Office), 3,000 SQM (Retail), 71.25% pre-committed to Services Australia.
• CBUS Tower: 30,000 SQM (Office), 360 SQM (Retail), 58% pre-committed to DFIT.
• Festival Plaza: 44,500 SQM (Office), 4,500 SQM (Retail), under construction with pre-commitment from Flinders University.
• The Adelaide Central Market: 15,000 SQM (Office), 6,000 SQM (Retail), awaiting major pre-commitment.

Investment Activity

• Strong sales volume: The Adelaide CBD recorded over $500 million in sales in the six months leading into January 2022, with domestic unlisted funds accounting for 57% of total sales.
• Major sales:
  • 25 Grenfell Street: Sold for $166.6 million, with a yield of 5.13%.
  • 21-25 Nile Street, Port Adelaide: Sold for $62.75 million, with a yield of 5.45%.
  • 80 King William Street: Sold for $25.5 million, with a yield of 5.58%.
  • 28 Franklin Street: Sold for $12.19 million, with a yield of 5.21%.

Fringe Market Analysis

• Vacancy rate decline: The Adelaide City Fringe vacancy rate decreased from 10.9% to 10.1% over the past six months.
• Prime vacancy: Fell to 3.15%.
• Secondary vacancy: Decreased to 12.13% due to the withdrawal of C grade stock.
• Rent trends: Prime and secondary rents remained firm, with prime at $371/m² and secondary at $265/m² as of January 2022.
• Yield firming: Prime and secondary yields increased by 35 basis points to 5.45% and 6.03% respectively.

Future Outlook

• Yield compression: Continued yield compression is expected due to strong demand and available capital.
• Investment potential: The market is expected to remain strong, supported by state infrastructure upgrades and long-term Defence-related investments.
• Tenant shift: As tenants move toward quality stock, secondary building owners are expected to invest in refurbishments to compete.

Conclusion

The Adelaide CBD office market is showing signs of resilience and growth, with strong demand for new generation prime stock and stable rents. The fringe market is also experiencing a decline in vacancy, suggesting increased interest in secondary grade assets. With significant future supply forecasted for 2023 and beyond, and continued investment activity, the market is well-positioned for further development and capital appreciation.