THE Newcastle CBD has been one of the better office market performers during the COVID-19 period, according to a research report released by Ray White Commercial this month.
The Ray White Commercial Between the Lines - Newcastle CBD Office Market Overview for March 2021 reported research had shown elevated occupancy as more companies look to regional locations to grow their businesses.
"Despite 2020 being a year of uncertainty for most office markets due to the pandemic, the Newcastle office markets have fared well with only limited change in take-up recorded at -622 square metres over the whole year," Ray White Commercial head of research Vanessa Rader said.
Ray White Commercial Newcastle director Lee Follington said leasing enquiry has remained sound keeping rental levels stable.
"Something to watch this year is parking spaces emerging as a significant tenant requirement and creating a substantial distinction between spaces that have parking allocations and those without," he said.
"The highlight for Newcastle, however, has been the growing demand for investment stock, this has been across the marketplace from smaller strata office offerings, through to larger freeholds, development sites, and the older showroom markets located in the area."
The research stated Newcastle offers 251,597 square metres of office stock of which 19,656 square metres is currently vacant, or 7.8 per cent.
"The completion of new supply will add high-quality stock into the marketplace which will be attractive to new and growing businesses to the region," Mr Follington said.
"However, this may slow further rental growth opportunities with incentives likely to play an increasing role for A grade assets while B grade and more secondary assets may see some divide in rentals achieved, albeit with limited incentives."
Meanwhile, Mr Follington expects investor and developer interest for a Mayfield East industrial site he is marketing. The multi-tenanted property at 1B George Street is returning around $105,000 gross annual income and is set for auction on April 21.