Adelaide and Melbourne have the second tightest CBD office markets in Asia Pacific, with vacancy rates lower than Sydney, Perth and Melbourne, according to new research by Colliers International.

The cities, each with a vacancy rate of 4.8 per cent, sit behind Seoul on the international scale which has a 3.1 per cent vacancy rate.

The cities have the 12th lowest vacancy rates in the world, according to the Colliers International Biannual Global Office Review for mid-year 2009, which covers 172 cities around the world.

Sydney was sixth on the Asia Pacific list with a vacancy rate of 7.7 per cent and Perth, which has fallen from its global perch at number one for the past 18 months, ranked seventh after climbing steeply from 0.3 per cent 12 months ago to now sit at 8 per cent.

Internationally, the top five office markets for lowest vacancy rate were Rio de Janeiro Brazil (at 0.6 per cent), Regina SK Canada (1.6 per cent), Victoria BC Canada (1.9 per cent), Tirana Albania and Geneva Switzerland (at 2 per cent each) and Lima Peru (2.7 per cent). Sydney, Perth and Brisbane (at 10.7 per cent) ranked 45th, 49th and 71st respectively.

Felice Spark, Colliers International director of commercial, said all regions of the world continue to experience below trend growth and, as a result, demand for office space has been sub-par relative to the recent past.

“A year ago, only major financial centres were reporting sluggish leasing activity; however since then weakness has spread to all continents and almost all countries and Australia has been no exception,” she said.

“In the Asia Pacific region weak results were posted during the first half of the year with the regional vacancy rate increasing by 278 basis points to register 11.4 per cent.

“This increase comes on top of a rise in vacancy recorded in the latter half of 2008 and brings the region’s vacancy rate up to levels experienced in 2005.”

Simon Hunt, Colliers International managing director of office leasing, said Asia Pacific posted slightly weaker results during the first half of the year with the regional vacancy rate increasing by 278 basis points to register 11.4 per cent.

“This increase comes on top of a rise in vacancy recorded in latter half of 2008 and brings the region’s vacancy rate back to levels recorded in 2005,” he said.

“Compared to regional world markets Australian CBD office markets are recovering well, with an average vacancy rate of 7.3 per cent, and this figure is expected to contract mid to late next year with limited new development to come online during that time due to restricted financing.”

Of the top 50 cities ranked by construction costs only Perth and Melbourne qualified, at 36th spot with 2.6 million square feet of new space underway, compared with Moscow at number one with 40.9 million square feet.

Gemma Battenbough

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