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Adelaide stacks up well globally, but…

Committee for Adelaide’s report Benchmarking Adelaide looks at what South Australia is doing well and where we are falling short compared with similar sized cities. Here, JLL managing director and head of capital markets SA, Ben Parkinson, unpacks some key insights and areas for improvement.

Aug 23, 2023, updated Aug 23, 2023
Image: Eric Smart/Unsplash

Image: Eric Smart/Unsplash

Commissioned by Committee for Adelaide, the recently released report Benchmarking Adelaide provides an analysis of Adelaide’s performance and perceptions.

Benchmarked against 20 of the world’s most exciting global cities, including Austin, Bilbao, Bordeaux, Portland and San Diego, Adelaide held its own against tough competition.

Adelaide ranked highly for business and investment dynamics, liveability and affordability, but needs improvement on the benchmarks of productivity, vibrancy, public transport and visitor experience.

JLL managing director SA Ben Parkinson says we’re doing well for business infrastructure

The report noted the drivers of city performance internationally suggest Adelaide’s future success will be shaped by three key factors.

The first is achieving critical mass – of jobs, capital and institutional collaboration – in key innovation niches.

This is especially relevant for Adelaide as it is better placed than many to coordinate the complementary strengths of its emerging innovation districts, such as Lot Fourteen, Tonsley Innovation District and Adelaide BioMed City.

Lot Fourteen is particularly noteworthy and JLL is optimistic about the investment dynamics and the significant benchmark for AI investment where Adelaide ranks in the top three among peers.

The second driver is the amplification of the city’s reputation for quality of life among prospective talent, aided by better access to housing and transport.

This underscores the importance of the key infrastructure projects that are underway, such as the Torrensville to Darlington extension of South Road and the importance of development that utilises the existing infrastructure and transport networks.

The third driver of city performance is ensuring the whole city is resilient to a changing climate and avoids getting locked into unsustainable and unproductive patterns of growth.

Adelaide’s response should be to focus and build the locations as flagships of the region’s capability, services and provision.

This is particularly relevant when it comes to the emerging sectors of global tech including medical, cyber defence and machine learning sectors.

One area in which Adelaide is well placed is our business infrastructure.

While our office vacancy rate is slightly higher than the benchmark average, it is due to the investment in new buildings, such as 60 King William Street, 83 Pirie Street, 57 Wyatt Street and the Festival Plaza, that is transforming the city’s ageing stock.

Since midway through 2022, new office developments delivered to market totalled 36,600 sqm.

Combine this with the 153,900 sqm of office space currently under construction and we have an historic supply wave, not seen in the market before.

By the time this current supply is completed, it will equate to 13.2% of total stock, and there is still a chance there are more development commencements in the pipeline.

The cross-border interest from developers has gone a long way to rebuilding the Adelaide CBD to house the businesses of the future in the next generation of low carbon, ESG-focused towers.

Benchmarking Adelaide noted stable growth and an appealing business environment underpins fairly resilient demand from corporates and occupiers.

This is also reflected in lower work from home (WFH) levels in Adelaide than many others during and after the pandemic.

Shorter lock-down periods and an easier to reach CBD have also driven higher return to city centre offices than in many cities.

This, coupled with our diverse tenant occupier profile, augurs well for investors looking to manage sector specific occupier risk as shown in the following chart.

Acknowledging the key outtake from the Benchmarking Adelaide report that we rank 5th amongst peers for Liveability, Affordability & Wellbeing, this renewed interest in Adelaide will also drive the next construction wave in the living sectors to house the workers and students of the future in Build to Rent, student accommodation and affordable housing.

In Q1 2023, Adelaide had the tightest residential vacancy in the CBD (1.0%) and the equal-tightest residential vacancy across the capital city metropolitan areas (0.5%).

Adelaide’s commitment to CBD working is also a positive for investors. In February 2023, the city’s office occupancy was the second highest nationally at 80% vs pre pandemic (Property Council of Australia). This was also substantially higher than the North American peer cities that are typically 65-75%.

Key infrastructure projects are essential to the growth in Adelaide, as evidenced by the Northern Expressway opening up northern employment precincts. The extension of the South Road upgrade from Torrensville to Darlington is critical in the increased development of the southern employment regions.

One element of the report that can be fixed very quickly is the perception of the city. Just 35% of Adelaide’s business people ranked the city as the best to start a business in Australia, however Adelaide ranked 3rd for business and investment dynamics.

The report noted that “Adelaide is not yet viewed as an important enough business location to appear or register in as many important measures of global business and investor perception as it could do”.

And it stated, simply we could take a leaf out of Austin’s copybook to create an authentic, co-owned brand identity for talent and corporate attraction.

The report recommended “building critical mass and communicating the opportunities” for specialised business and far-sighted investors.

In other words, let us start shouting even harder to the rest of the world to get them take notice of our amazing city.

For over 200 years, JLL has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAY SM. Learn more at jll.com

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