Newcastle CBD's office vacancy rate improved significantly in the 2016 calendar year, with tenants from outside the CBD opting instead for the rejuvenated city centre, says Ray White Commercial Newcastle.
Lee Follington, principal of Ray White Commercial Newcastle, said building improvements, new infrastructure, and the redevelopment of the Hunter Mall have made the CBD much more appealing to new tenants.
"During the 2016 calendar year there has been a swift turnaround in indicators with net absorption recorded at 12,504 sqm," said Follington in the 'Between the Lines Newcastle CBD Office Market Overview March 2017'.
Stage one of The Gateway added 4,720 square metres to office stock, and was fully tenanted upon completion to Mine Wealth + Wellbeing, who relocated from Warners Bay.
The twin-tower office and residential developments at 18 Honeysuckle Drive added 6,928 sqm of office stock to the market, and has been let to Southern Cross Austereo, which relocated from Charlestown, according to Follington.
Vanessa Rader, head of research Ray White Commercial, said the vacancy of the Newcastle CBD office market improved to 9.3 per cent at the end of 2016, down from 13.0 per cent at the end of the previous year.
The better quality the building, the lower the vacancy rate, said Rader. The vacancy rate for 'A grade' stock currently sits at 8.6 per cent, but for 'B grade' stock sits at 9.3 per cent as at January 2017, and 'C grade' stock is at 11.4 per cent. The 'D grade' office market is more volatile, at the vacancy rate is currently at 7.1 per cent.
Follington said rents range up to $420 per sqm net with an average of $335 per sqm depending on size, term, and location.
To read the full report 'Between the Lines Newcastle CBD Office Market Overview March 2017' click here.
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