Canberra's property council is calling for urgent action on the increasing number of empty older office blocks in the capital.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Twenty-one per cent of Canberra's older office space, the C and D-grade offices, was vacant as of January 2018, according to Property Council figures.
The overall vacancy rate, including the top A-grade space, rose from 11.6 per cent to 13.1 per cent in the past six months.
Property Council ACT executive director Adina Cirson said the disparity between demand for new and old office space must be dealt with urgently through incentives to convert tired and lower performing office spaces.
"What we have to do is look at some incentives to encourage older stock to be redeveloped either for new office space or for other purposes," Ms Cirson said.
"The C and D grade stock might need to be knocked down and rebuilt and I think there also needs to be some incentives that will encourage some developers to really get in and upgrade stock where they can and knock it down.
"The figures highlight the lower grade stock is becoming quite obsolete in the market, people are less likely to sign on a long term lease on buildings that are 20 to 30 years old."
Ms Cirson said the increase did not include the airport office space, which had been leased for government departments but was yet to be occupied.
Civic vacancy increased from 10.1 per cent to 11.3 percent due to 10,035 square metres of supply addition. The non-city market increased from 12.2 per cent to 13.7 percent due to an addition supply of 41,329 square metres.
The problem is set to get worse with a swathe of new office blocks in construction or planning. Doma is building a new office block to house ACT public servants on the old Dickson motor registry site.
Another new block for ACT public servants is being built beside the ACT parliament in London Circuit, and on the same block a 12-storey commercial office building is planned.
The Property Council said another 16,420 square metres of new space would come on to the market this year alone, and 15,500 square metres next year.
From 2020 onwards, another 70,000 square metres would hit the market.
Ms Cirson said the vacancy rate for A-grade office space was 8.5 per cent, with vacancies in C and D-grade space at 21.4 per cent.
"The ACT property industry believes it is critical that urban renewal for our city also means ensuring we have the best office product on offer, creating incentives for new and existing businesses to establish and invest here before Sydney and Melbourne," Ms Cirson said.
"We want to have the best workplaces in the country, and to do that, we need to make sure we are creating the right environment for building owners to deliver them."
Also on Thursday, the Housing Industry Association highlighted a cooling in the new housing market, with approvals for new homes and apartments slowing.
In Canberra, new dwelling approvals were down 35 per cent from November to December.
In the final three months of 2016, 1461 new dwellings were approved in Canberra (int rend terms). In the same period in 2017, 739 new dwellings were approved.
