Adelaide Spotlight + Trends Affecting The Market

September 12, 2018 | Commercial Real Estate

Aerial view of Adelaide skyline

The Adelaide commercial office market is the most affordable in Australia, and some emerging trends will make it more lucrative for many businesses to establish themselves in the city.

Rental rates

Average rental rates for A-Grade spaces in the Adelaide CBD have remained steady over the past 12 months at $370/sqm. This rate is on a par with comparable space in the Canberra CBD, and significantly cheaper than what you can expect to pay in the Brisbane, Perth, Melbourne and Sydney CBD and Parramatta markets.

You’ll find slightly cheaper rates on the Adelaide CBD fringe, which currently averages $345/sqm.

There are also plenty of lease incentives on offer, with the CBD averaging 33% and the city fringe about 25%. These rates are much more lucrative than what you’ll get currently get in other Australian capital city markets, except for Perth.

Vacancy rates

Vacancy rates for commercial office space in the Adelaide CBD are at just under 15%, which is significantly higher than the national average, now sitting at around 9%. That gives current tenants as well as future tenants plenty of negotiating power.

That being said, it’s important to note that vacancy rates in the Adelaide CBD office market are currently at the lowest level that they’ve been for four years.

Vacancy rates on the Adelaide CBD fringe are at about 11%.

Stock

Adelaide stock levels have remained relatively steady over the past year in both the CBD and the city fringe markets, but there are a couple of major developments underway, including a 21-storey commercial office tower in Franklin Street. This will allow tenants to find office spaces from a larger variety of choices, from creative/boutique spaces to more standard offices layouts.

Trends affecting the market

Vacancy rates in the Adelaide office market are being driven down by two key factors:

  1.  Major government contracts

Organisations and workers are relocating to Adelaide in droves, off the back of some notable defence, engineering and mining contracts recently awarded to the city. This has spurred on infrastructure development and employment, along with capital investment in the Adelaide CBD commercial office market.

  1. Small business payroll tax to be scrapped on 1 January 2019

The recently elected Liberal government in South Australia plans to abolish payroll tax for small businesses in South Australia from the beginning of 2019. This change will make it more attractive for businesses that employ less than 25 workers and that have an annual payroll up to $1.5 million to operate in South Australia.

Tenant Representation Services, Adelaide

Tenant CS is a commercial tenant advisory service that offers tenant representation services in Adelaide. We also cater for businesses across Australia, in cities such as Sydney, Melbourne, Perth, Brisbane and Canberra, but also in regional areas.

We represent you, the tenant, and our in-depth knowledge of the Australian leasing market gives our clients the competitive advantage when it comes to finding a space or negotiating a commercial lease and more!

So, if you’re on the hunt for tenant representation in Adelaide, get in touch with our team today!

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The Author

Timothy Battut joined Tenant CS Australia in 2018 in order to support the tenant representation Sydney team. Prior to this, he worked as part of the Tenant CS Singapore branch as a Research Analyst intern.

Timothy has a Bachelor Double Degree in International Business from Groupe ESC Clermont (France) and can speak three languages (English, French and Spanish).

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