BUSINESSES moved out of Surfers Paradise in droves last year in favour of the ‘more boutique’ Broadbeach, according to the latest PCA Office Market Report.
To put it in perspective, 4000 sqm was taken up in Broadbeach, exactly the same amount by which vacancy increased in Surfers.
CB Richard Ellis office services senior director Tania Moore says the movement between the suburbs has been substantial.
“There has been a significant downward shift in vacancy at Broadbeach due to take-up in The Oracle (pictured) development resulting in over 4000 sq m being absorbed in the last six months,” says Moore.
“At the same time, Surfers Paradise has seen an increase in vacancy of over 4000 sq m. The shift in vacancy between the precincts can be attributed to a clustering of tourism, property and finance-related businesses establishing in Broadbeach which had previously been the domain of Surfers Paradise.”
Broadbeach’s office vacancy rate dropped 13 per cent in that period, making it the best performed suburb on the Gold Coast.
Moore says Gold Coast’s office vacancy levels remained relatively steady over the six months, with a small 0.6 per cent reduction in office vacancy since June to 21.8 per cent.
The report was compiled through analysis of Surfers Paradise, Broadbeach, Southport, Robina, Varsity Lakes and Bundall.
Surfers Paradise office vacancy rate increased from 23.8 per cent to 26.9 per cent, while Bundall also lost a number of tenants to move from 29.1 per cent vacancy to 31.3 per cent.
Southport had a slight drop in vacancy rates, from 18 per cent to 17.1 per cent, as did Robina-Varsity, which fell from 20.4 to 19.6 per cent.
Moore says smaller tenants absorbed more than 9000 sq m in the past year, but limited larger tenants moved into the city.
“The start of 2012 has seen strong levels of enquiry although within the lower size range and some larger requirements are on hold until after the state government elections in March,” says Moore.
“We anticipate the market will continue to track at a steady level throughout 2012.”
Ed Howard, in charge of office leasing for Colliers Gold Coast, says Broadbeach and Robina are the two best-performing areas for commercial property in the city.
Howard says the receivers’ sale at Oracle would have attracted some tenants, but would not have been the sole reason they moved there.
“Macquarie Southern Cross moved in there from Southport and I think Oracle suits the persona of a radio station much more than their previous space, with the retail and hospitality amenity there – there are some big attractions,” says Howard.
“Broadbeach is more boutique and a little less congested, which could also attract some people, but Surfers has always been a good performer.”
Howard says there is no need for concern about the shift away from Surfers.
“There has been quite a bit of absorption in Surfers Paradise in the last year; it just depends when people’s leases are up. Some businesses in Surfers might need to reduce their floorplan, but don’t have the option in their current space and have to move somewhere different,” he says.
“The result of this study is the best in the past six years in terms of absorption. All the local businesses are shifting, so it doesn’t really change the vacancy situation on the Gold Coast as a whole.”
Howard says just 10-15 per cent of the absorption in the past six months has been from new business entering the city. He says the city is still eating through an oversupply from developments built in the middle of last decade before the GFC hit and its vacancy rate was at 21.8.
“In 2012 we are likely to see the vacancy rate go below 20 per cent, which we haven’t seen since all that new stock came on the market in 2004-05,” he says.
With no large new projects on the horizon, Howard predicts vacancy rates will drop back down to single-digit numbers by 2015.