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SOUTH AUSTRALIA<br />
Don’t judge a book by its cover - Adelaide is<br />
performing better than it seems.<br />
If you were to assess Adelaide’s performance based on statistics, you wouldn’t see<br />
a very appealing story. With low net absorption, high vacancy and minimal rental<br />
growth, Adelaide appears to be struggling to get back on its feet. However, all is<br />
not as it seems. The vacancy rate has risen throughout 2015, due to amount of<br />
new stock coming to market, which historically has been a key indicator to predict<br />
a strong real estate market moving forward.<br />
Adelaide’s moderate performance in 2015, spurred a trend towards centralisation<br />
and consolidation that has driven a number of large lease transactions in the last<br />
12-18 months. With high incentives on offer, particularly in the CBD, tenants have<br />
been able to upgrade and direct incentives towards either educing recurring costs<br />
or towards capital costs for fitout.<br />
The desire to escape old and obsolete fitout is also proving to be a powerful driver,<br />
especially when new fitouts can drive efficiency and reduce footprint and ultimately<br />
cost. With incentives now at a level that can fully fund a new fitout, the case for<br />
relocation is made slightly easier.<br />
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