Canberra defies the turmoil
Against the backdrop of the pending federal election, property agents are dismissing suggestions the Canberra office and retail markets will be hit by a tenant exodus.
While there are always some department reshuffles after changes of state and federal governments, most of the key commercial towers have long-term leases.
Agents say major vacancies are more likely to be the result of shifts to a number of new developments due for completion in the coming year, with tenants vacating buildings that fall into the C and D categories.
Over time, these lower-graded assets will be refurbished to the 4.5- star NABER-rated assets that most government departments are required to lease, or will be converted into residential space.
Also, more than half the working population of Canberra is employed by the private sector, which rolls along regardless of who is in power.
A report from Knight Frank says the vacancy rate in Canberra is about 11.9 per cent, with rents flat about $450 a square metre. But incentives are rising in some buildings.
Colliers International chief executive Paul Powderly is confident about the sustainability of the Canberra market and disagrees with suggestions of volatile times ahead.
"The average age of public servants in 1998 was 55-plus and that made up about 5.9 per cent of all employees. In 2012, that figure was now 15 per cent, so in the next few years there will be a lot of retirements," he said.
"The fear of major job losses with any change of government is not correct. It follows, then, that we are not expecting large vacancies to occur in the coming year."
Mr Powderly said the vacancy rate was expected to average about 10-12 per cent in Canberra, but some leasing would be absorbed by the opening of new projects and the closure of the older assets.
He said Canberra's office market was now leased closer to an even split between the public service and private businesses.
Latest developments include Walker Corporation's Northbourne Square, the new 24,000-square-metre Department of Human Services site at Greenway, and the department's head office at 18 Canberra Avenue, Forrest. Walker Corp also has Monaro business park.
Walker Corp projects also include the construction of the new $250 million 40,000-square-metre site at 50 Marcus Clarke Street in the city, which will be the headquarters for the Department of Education, Employment and Workplace Relations(DEEWR).
The managing director of CBRE's Canberra office, Andrew Stewart, said the long-term leases held by the government departments were a natural hedge against any large- scale staff reductions.
"Department heads cannot just walk away from a lease, and any new government does not want to start paying out lease contracts, so reports of Armageddon are misguided," Mr Stewart said.
"In the past 18 months, there have been a number of long-term leases signed, such as Pricewaterhouse-Coopers, Telstra and Ernst & Young, as well as government tenants. That provides the sector with long-term stability."