2025-04-17-莱坊-Adelaide_Office_Market_Report_April_2025_9页_1mb

Adelaide CBD Office Market Summary

Core Content Overview

The Adelaide CBD office market experienced a rebound in 2024, marked by strong net absorption, rising rents, and a reduction in vacancy rates. Despite limited prime supply, the market remains resilient, with a growing emphasis on quality and sustainability in tenant requirements.

Key Insights

• Vacancy Rates: Total vacancy in the Adelaide CBD decreased from 17.5% in July 2024 to 16.4% in January 2025.
  • Prime vacancy rate dropped from 18.1% to 18.1% (no change from previous mention, likely a typo).
  • Secondary vacancy rate fell from 14.9% to 14.9%, remaining below its 10-year average of 16.2%.
• Net Absorption: Net absorption reached a record high of 22,606sqm in January 2025, the second largest 6-monthly absorption in 15 years.
  • Prime absorption was significantly higher than secondary, at 22,102sqm compared to 504sqm.
  • Over the 12 months to January 2025, prime absorption was 36,857sqm, while secondary was 14,790sqm.
• Rental Growth: Gross face rents increased by 2.79% for prime and 0.49% for secondary in H2 2024.
  • Prime rents averaged $674/sqm.
  • Secondary rents averaged $460/sqm.
• Yields: The average prime yield for CBD assets was 7.34%, 72 bps above the 10-year average.
  • Prime yields are softer than Sydney (6.03%), Melbourne (6.52%), and Brisbane (7.25%).
• New Supply: A total of 43,000sqm of new construction is expected to complete by 2026.
  • Key developments include 50 Franklin (21,000sqm), Victoria Tower (2,206sqm), and Market Square (22,000sqm).
• Refurbishments: Over 68,000sqm of upgraded space re-entered the market in H2 2024, with 2,826sqm of new refurbishments expected in 2025.

Leasing Market Trends

• Vacancy Reduction: Overall vacancy rates dropped from 19.3% to 16.4% in 2024, driven by strong demand.
  • Prime vacancy decreased from 22.0% to 18.1%.
  • Secondary vacancy fell from 15.2% to 14.9%.
• Absorption Trends: The market saw consistent positive net absorption for four consecutive six-month periods.
• Tenant Preferences: There is a growing demand for quality office space with modern amenities and environmental sustainability.
  • The vacancy spread between new and old generation stock highlights this shift, with new buildings at 10.28% and older at 37.07%.
• Rental Growth: Gross effective rents increased for both prime and secondary assets.
  • Prime rents rose from $431/sqm to $443/sqm.
  • Secondary rents increased from $283/sqm to $285/sqm.
• Outgoings: Outgoings stabilized for both prime and secondary assets.
  • Prime outgoings grew by 3.86% to $152/sqm.
  • Secondary outgoings increased by 2.47% to $125/sqm.
• Incentives: Incentives remained stable for prime assets at 34.3%, while secondary assets saw upward pressure.

Investment Activity

• Transaction Volumes: Only two sales over $10m occurred in H2 2024.
  • 19 Grenfell Street sold for $25.5m at $2,423/m2 NLA, achieving a CMY of 8.97% and a WALE of 1.10 years.
  • 139 Frome Street sold for $11.7m at $3,705/m2 NLA, with a CMY of 7.02% and WALE of 0.80 years.
• Yield Trends: Prime yields softened by 6bps to 7.34% in January 2025.
  • Secondary yields also softened by 25bps to 7.65%.
• Market Comparison: Adelaide's prime yield is higher than Sydney and Melbourne but lower than Brisbane.

Fringe Market Performance

• Net Absorption: The Fringe market recorded a net absorption of 2,712sqm in H2 2024, well above the 10-year average of -217sqm.
• Vacancy Rates: Overall vacancy rates in the Fringe decreased from 12.0% to 10.8%.
  • Prime vacancy increased from 1.7% to 4.1%.
  • Secondary vacancy decreased from 15.0% to 12.7%.
• Rental Growth: Prime gross effective rents remained stable at $371/sqm, while secondary rents increased from $272/sqm to $299/sqm.
• Yields: Both prime and secondary yields softened by 30bps during the period.

Recent Research and Contacts

• Research Contacts:
  • Amanda Azariah – Property Analyst, Valuation & Advisory
    • Email: Amanda.Azariah@au.knightfrank.com
    • Phone: +61882335258
  • Max Frohlich – Institutional Sales
    • Email: Max.Frohlich@au.knightfrank.com
    • Phone: +6182335267
  • Nick Bell – Valuation & Advisory
    • Email: Nick.Bell@sa.knightfrankval.com.au
    • Phone: +618 8233 5242
  • Ben Burston – Research & Consulting
    • Email: Ben.Burston@au.knightfrank.com
    • Phone: +61290366756
  • Dr Tony McGough – Research & Consulting
    • Email: Tony.McGough@au.knightfrank.com
    • Phone: +61396044608
  • Martin Potter – Office Leasing
    • Email: Martin.Potter@au.knightfrank.com
    • Phone: +618 8233 5208
  • Rory Dyus – Office Leasing
    • Email: Rory.Dyus@au.knightfrank.com
    • Phone: +6182335261

Summary of Key Trends

• Positive Net Absorption: Continued high absorption indicates strong demand, especially for prime space.
• Rising Rents: Both prime and secondary rents have increased, with prime showing more significant growth.
• Reduced Vacancy: Overall vacancy rates have declined, reflecting improved market conditions.
• New Supply and Refurbishments: A steady supply of new developments and refurbishments is expected, with a focus on quality and sustainability.
• Investment Activity: Limited high-value sales suggest cautious investor behavior amid global uncertainty.
• Tenant Preferences: There is a clear shift towards quality, sustainable, and amenity-rich office spaces.