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More offices occupied in Docklands

28 Feb 2017

By Sunny Liu

Docklands’ office vacancy rate is among the lowest in Melbourne, a sign of strong employment and economic growth.

Data published by the Property Council of Australia show that the office vacancy rate in Docklands has dropped slightly from 3.4 per cent in July 2016 to 3.3 per cent in January 2017.

The overall commercial vacancy rate in metro Melbourne is 6.4 per cent as of January, down from 7 per cent last year. Melbourne has continued to host the second lowest vacancy rate among all of the big cities in Australia.

Docklands is performing strongly on state and the national levels and its low rate indicates a healthy local economy.

Some international corporations have recently set up their offices in Docklands, including LinkedIn and Facebook.

According to Sally Capp, Victorian executive director of the Property Council, rising demand for office space has contributed to the improvement in vacancy rates in Melbourne.

“Melbourne’s office market vacancy rate decreased over the last six months due to the second highest net demand figure on record (more than three times the historical average). Positive demand was concentrated in the A Grade segment,” she said.

Another report from Savills Research reveals that Melbourne’s CBD contains 3,625,325sqm of lettable office space – the highest amount in five years.

Among the business precincts in Melbourne, Docklands has the highest net absorption of more than 90,000sqm in the six months leading up to January 2017. The total net absorption in Melbourne for the same time period was 109,612sqm.

A higher absorption rate means there are more properties occupied and the Property Council data indicates that a lot more commercial properties have been snatched up in Docklands than any other precincts in Melbourne’s CBD.

However, not all areas around the Melbourne CBD are showing strong tenant demand.

The office vacancy rate in the north eastern precinct, namely Fitzroy and Collingwood, has dramatically surged from 8.3 per cent to 14 per cent in the past six months.

“Negative demand was concentrated in the Civic and North Eastern precincts where vacancy rates both rose,” Ms Capp said.

Ms Capp warns that, with the strong demand for commercial properties in Melbourne, future supply could be a concern.

“Only 40,246sqm of new stock is due to enter the market this year and 51,400sqm forecast in 2018,” she said.

“We are commissioning research into the drivers of the approaching shortfall and the policy changes necessary to provide a steady supply of high quality commercial office space into the future.”

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