THE office market vacancy rate in Canberra increased over the past six months to its highest level on record according to the Property Council of Australia’s latest Office Market Report released today.

Canberra’s office market vacancy rate increased from 13.6 per cent reported in July 2014, to 15.4 per cent over the six months to January 2015.

Canberra continues to have the second highest office market vacancy rate of any capital city, marginally behind Brisbane CBD which reported vacancy rates of 15.6 per cent. All grades of space in the ACT market are now well above 12 per cent and national benchmarks, with the exception of B Grade at 11.4 per cent.

ACT Executive Director of the Property Council of Australia, Catherine Carter, says: “Movement in the Canberra office market and the increase in vacancy rates have come about because of 46,037sqm of supply additions, combined with -21,358sqm of net absorption.

“Civic’s vacancy rates increased from 11.5 per cent to 14.7 per cent due to 20,014sqm of supply additions, while net absorption was -8,857sqm. 5,148sqm of space was withdrawn over the period.

“Vacancy in the Non Civic market increased from 14.5 per cent to 15.7 per cent, the highest on record, due to 26,023sqm of supply additions and -12,501sqm of net absorption. Withdrawals over the period totalled 16,415sqm.

“Notably, both A Grade and C Grade segments are recording historically high levels of vacancy, with A Grade vacancy in the Canberra market increasing from 12.6 per cent to 15.7 per cent, and C Grade recording a shift from 15.1 per cent to 17.3 per cent.

“Unfortunately, urban decay is now becoming a feature of our city centre and an issue of serious concern. But there is a silver lining.

“The ACT Chief Minister, Andrew Barr, has already demonstrated a strong vision for Canberra through his commitment to enabling urban renewal in our city and the establishment of a new Urban Renewal portfolio.

“There is now a very real opportunity for government to work with the industry to develop strategies to attract investment in our city, and to remove impediments which act as a brake on investment.

“The Property Council suggests that this could be done as part of the Government’s economic stimulus package, which is already established but which could now be refined to meet changing circumstances,” Ms Carter concluded.