Page 2432 - Week 08 - Wednesday, 13 August 2014
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the local construction industry at what is a challenging time beyond 2016—beyond 2016. The sale of older surplus government office buildings will also provide the potential for a number of adaptive re-use and other development opportunities, particularly in the CBD and along the Gungahlin to Civic corridor. The co-location of government functions within a major complex in Civic provides an important employment hub and an anchor that links a range of other strategic projects for the city, such as city to the lake, the city plan and capital metro.
Let us talk now about office vacancy rates. The latest headline vacancy rate is 13.6 per cent for all accommodation and 12.6 per cent for A-grade accommodation. This means that as of July 2014, there are about 323,000 square metres of vacant office space. Of this, only 40 per cent is A-grade, and this includes a substantial amount of space built at the airport without any long-term pre-commitments. These figures by no means represent near-full occupation; nor do they indicate that the market is critically oversupplied or that new developments are not appropriate.
We are seeing a new development in Tuggeranong supported by the federal government. I hear nothing from the opposition opposing that new development. In town centres, there is a relatively modest amount of A-grade office accommodation available to meet longer term requirements. In Civic, of the 77,000 square metres available, only 16,000 is A-grade. In Gungahlin, Belconnen, Woden and Tuggeranong combined, there is only 8,750 metres of A-grade space available, all of which is in Belconnen.
It has been suggested that the government put its process on hold because there is a new unleased A-grade development in Barton of 24,500 square metres due to be completed later this year. However, Barton and Parkes accommodate demand for Australian government related activities, and there is currently only 6,300 square metres of A-grade space available.
As this vacancy data shows, there are not substantial A-grade buildings sitting vacant in Civic or in our town centres that could effectively accommodate ACT public service requirements of around 40,000 square metres in a way that achieves the efficiencies of scale and scope that are being targeted through co-location. So this project, the ACT government project, will not have a long-term impact on office accommodation vacancy rates.
It is possible that for C and D-grade stock in this city, vacancy rates will continue to be high. The development of a new building, though, would have no significant long-term impact on overall vacancy rates. This is because there will be substantial opportunities to renew, refresh and redevelop older accommodation. The ACT government will be part of this process, with our own ageing offices, particularly Macarthur House and the Dickson motor vehicle registry, prime candidates for renewal and redevelopment.
In the current climate, with reductions in demand from the commonwealth, it is, right now, the time for owners to refurbish, upgrade and update their stock to meet today’s demand for highly energy efficient, innovative and connected buildings. The government project, in combination with a range of other stimulus measures to
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