Office vacancies across Newcastle have risen to 11.7 per cent in the past 12 months, but remain below the Australian average.
Total vacancy increased from 10.8 per cent to 11.7 per cent in the year to January 2023, according to Property Council of Australia's latest Office Market Report. This was below the Australian vacancy rate of 13.3 per cent.
Property Council of Australia Hunter regional director Anita Hugo said the rise was largely due to additional supply in Newcastle.
An extra 10,621 square metres of office space opened in the 12 month period, while 3,770 square metres was withdrawn. The take-up resulted in a net absorption of 3,655 square metres.
Office vacancy in Newcastle has steadily increased from 7.3 per cent in 2019 as more work space has been built throughout the city.
A large chunk of new office space this year will come from HYG's 727 HQ development on Hunter Street, which is almost complete. The 15-storey building will offer almost 14,000 square metres of commercial space.
Colliers is marketing the property. Director in charge Peter Macadam said two floors had been leased, while proposals were out on another 10,000 square metres.
Mr Macadam said while the vacancy had risen in Newcastle, the increased available stock made the city more competitive in attracting new businesses. He said there was also movement within the market, with some businesses expanding and upgrading their office quality.
Ms Hugo said despite work behaviours changing throughout the pandemic, the Newcastle office market remained strong.
"Businesses are continuing to recognise how attractive the regional office is to employees as we continue to see more people migrate from large cities post pandemic," she said.
"We know that places like Newcastle are increasingly attractive as centres of economic activity as they also offer the lifestyle that more and more people are seeking, and we need to harness this opportunity."
