This article is from the Australian Property Journal archive
BRISBANE was one of the star performers amongst CBD office markets over the past six months, with vacancy tightening from 13.9% to 12.9%, and the rate is expected to come down further with no stock additions planned for 2023.
Brisbane’s drop in vacancy was the largest recorded of any CBD in the six month period to January, according to the Property Council of Australia’s latest Office Market Report.
The CBD reported the strongest annual positive net absorption figure, at 56,000 sqm, across all Australian CBD markets, according to JLL.
Chris Butters, CBRE managing director, Brisbane & Queensland state director, office leasing, said that with no new supply due to enter the CBD market in 2023 and elevated construction costs impeding future new supply, it is entirely plausible that we see very few if any new developments commence construction this calendar year.
“As a result of improved occupier demand we did witness strong effective rental growth last year with prime grade face rents increasing on average by 10%, a trend we see continuing into the first of 2023.”
Brisbane’s CBD office market saw its largest quarterly rental increase in over 10 years as face rents jumped 6% in the final three months of the year, according to Cushman & Wakefield.
The brokerage market of 100 to 1,200 sqm continued to outperform with a clear desire by tenants to reutilise existing and/or newly fitted accommodation where possible to capitalise on favourable effective rental positions, Butters said.
The pre-commitment market was also buoyant in the second half of the year with new developments such as 360 Queen Street and Waterfront Brisbane securing new tenants.
“Whilst broader market conditions are likely to remain volatile over the next six months, we are hopeful that the rebounding resource sector and the growth of our local professional services/government sector will help underpin an active period,” Butters said.
Billy Miller, Cushman & Wakefield’s director, head of office leasing believes Brisbane CBD vacancy has continued to taper over the last six months and looking forward it should continue to tighten further with no stock additions planned for 2023.
Gold Coast market shining bright
Over on the Gold Coast, above average annual take-up has been seen over the last two-year period, with the most demand for sub-250 sqm fitted suites.
Average annual net absorption for the past two years has been over 15,000 sqm per annum and overall unoccupied space now totals under 30,000 sqm across all building grades, according to CBRE.
“These market conditions are putting pressure on occupiers with strong rental growth and limited choice resulting in the compromise of location and building grade to increase options for consideration. The A-grade market is especially tightly held due to the long-term flight to quality trend and most of these assets are on the verge of 100% occupancy,” said CBRE senior director, office leasing, Tania Moore.
The only new supply addition for 2023 is 6,820 sqm within QIC’s purpose-built headquarters for the Department of Human Services at Robina. There are no new substantial supply additions for the foreseeable future as all proposed projects were put on hold due to construction cost concerns.
Moore said the low vacancy levels have created an environment for the emergence of strong rental growth, which will support the feasibility of future projects, although most developers are seeking 50% pre-commitment which is challenging to achieve in a market where the average tenant size is 150 to 250 sqm.
