Canberra Office Landlords Await Budget Outcomes
Office landlords will be closely awaiting the outcomes of tomorrow’s Federal budget to see how the Government’s fiscal priorities influence the ACT’s workforce.
A series of Government reviews – into Australia’s defence capabilities, the National Disability Insurance Scheme (NDIS) the RBA and other sectors including aged care – will be reflected in Tuesday’s Budget, with new public sector requirements set to influence occupancy rates in the ACT’s office market.
Private sector consultancies and service providers will also be watching the announcements for 2023-24 to determine whether they needed to scale-up for new government initiatives and tenders. With limited large office tenancies coming to market over the next 12 months, tenants intending on winning new Government service contracts would need to move swiftly, said LJ Hooker Commercial Canberra Managing Director Greg Lyons.
According to the most recent LJ Hooker Commercial Office Market Monitor, Canberra will account for approximately 11% of all national office completions in 2023 and eight percent in 2024.
Lyons said the city’s office leasing market traditionally went dormant in the six weeks leading up to Budget night when new Government priorities for the Forward Estimates (next four years) are announced.
“It then takes up to six weeks after every Budget for some normality and confidence to return in decision making on future office requirements,” said Lyons.
“With this Budget, we anticipate additional staffing will be required to deliver increased expenditure in Defence, Cyber Security, Aged Care, Health, NDIS and climate change initiatives. That could trigger a flight to quality with Government standards around higher-grade office accommodation with a focus on net-zero emissions, high quality end-of trip facilities, access to health and wellness type amenities in their buildings.
“There’ll also be enquiries from the private sector with consultants and service providers wanting to be in a position to move quickly and secure additional space after the Budget.”
If the Australian Government scales-up its workforce as a result of the Budget, a flight to quality would place real pressure on B and C Grade office landlords to upgrade their buildings, Lyons said.
Some landlords may need to think more seriously about how to reposition their assets so they are appealing to smaller tenants, Lyons said.