Growing Sunshine Coast office market absorbing stock

THE Sunshine Coast’s local economy was going from strength to strength, with the ongoing labour growth supporting the commercial property market, according to Ray White’s latest Between the Lines* commercial research.

Ray White Head of Research Vanessa Rader said after two years of strong supply additions for the Sunshine Coast market, 2019 had seen a halt to new supply, giving time for existing stock to be absorbed.

“During 2017 and 2018 we saw the addition of much-needed A grade accommodation to cater for the growing business needs of the region,” Ms Rader said.

“While some stock was completed with commitment, the overall high level of uncommitted supply additions resulted in an increase in vacancy levels to their peak rate of 21.8 per cent in January 2019.

“During the 2019 calendar year we’ve witnessed a high level of take-up, and with supply limited to a small addition (765sq m) at 8 Maroochydore Road, there has been strong scope for vacancy correction.

“According to the Property Council of Australia’s (PCA) Office Market Report, the current vacancy rate has been recorded at 16.7 per cent, which represents 31,674sq m as at January 2020.

“While vacancies may be high now, these will be quickly absorbed given the limited future office stock anticipated to enter the market, coupled with high enquiry levels and overarching demand for stock.

“Quality assets will continue to be in increased demand as new players into the Sunshine Coast continue to strive for new standards of accommodation.”

Ray White Commercial North Coast Central Managing Director Michael Shadforth said the Sunshine Coast was in a growth phase.

“Population has increased 2.57 per cent p.a. over the last few years and projections of 2.5 per cent p.a. growth looking ahead puts the Sunshine Coast well ahead of the Queensland average growth forecast of between 1.3-2.0 per cent p.a. over the next ten years,” Mr Shadforth said.

“Jobs growth for the region continues to show robust results with 149,362 local jobs recorded as at June 2019, an uplift of 6.68 per cent over a 12-month period, compared to just 1.73 per cent growth across Queensland.

“This high level of employment has had a positive effect on the commercial property market, resulting in take up of stock in both the office and industrial markets.

“Latest results for the Sunshine Coast office market has identified 10,038sq m net absorption (dominated by A grade assets) bringing vacancies to just 16.7 per cent.

“Vacant office space across the broader Sunshine Coast market was surveyed, resulting in 39,758sq m of vacant stock across 245 listings, that included stock beyond the PCA office boundaries.

“While the bulk of stock is in the Central Sunshine Coast precincts of Maroochydore, Buderim and Nambour, there’s 13,596sq m recorded vacancies, which extend north and south of these regions competing for tenants.

“Of the listings, 147 are within Central Sunshine Coast, and 80.27 per cent represent stock smaller than 200sq m that are mostly located within Maroochydore.

“While the larger size ranges are limited, they’re in most abundant supply in Maroochydore and Nambour, making this a key location for larger tenant requirements.

“Looking to the south, there are currently 50 vacant listings totaling 9,224sq m. This stock is evenly distributed across Caloundra and Warana, offering options across all size ranges.

“To the north, a further 4,372sqm is available across 48 listings, over 90 per cent of which is for stock in the sub-200sq m size range, the bulk being within the Noosa precinct.”

*Ray White Between the Lines – Sunshine Coast Office Market – February 2020.