NEWCASTLE City Council’s proposed move to the Gateway Two building going up at Newcastle West will be a major topic of discussion at a Property Council lunch at City Hall on Friday.
Newcastle Lord Mayor Nuatali Nelmes and property figures including Colliers International agent Peter Macadam will discuss the historic move, which was announced in December.
Mr Macadam said the council’s commitment was critical to that building going ahead, because it was very difficult for developers to get project finance without having tenants signed up to leases.
On the council’s intention to leave its Civic home, Mr Macadam said it often made sense for businesses “from a cash flow perspective” to get their properties “off their balance sheet and not have to pay for maintenance costs”.
“They would normally sell their property and reinvest the money in the business,” Mr Macadam said.
He doubted the roundhouse would be used for commercial purposes after the council moved out, saying the building was “too inefficient”.
With the city’s older commercial spaces often unsuitable for modern business needs, Mr Macadam said new, high-quality office space was critical to attracting big new businesses to Newcastle.
The lunch will also hear about the state of the CBD office market, with a Property Council survey putting Newcastle’s January vacancy rate at 9 per cent, an improvement on the 10.3 per cent figure recorded six months before.
The all-important A-grade vacancy rate had fallen from 8.6 per cent in July 2017 to 6.8 per cent in January.
Although the Newcastle vacancy rate was effectively twice the Sydney CBD rate of 4.6 per cent, Mr Macadam said Newcastle was competing with non-CBD areas such as Parramatta and the Gold Coast when it came to attracting business tenants.
He said Newcastle had “a massive advantage” over Parramatta in that rents were lower, and businesses could attract employees by pointing to the city’s obvious urban renewal and the Hunter’s more laid-back lifestyle.
Newcastle was midway in a measure of 15 non-CBD markets, with a higher office vacancy rate than Parramatta, Chatswood and North Sydney, but a lower rate than Wollongong, St Leonards, the Brisbane fringe and the Sunshine Coast.
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