This article is from the Australian Property Journal archive
SALES are set to pick up in Brisbane’s suburban office market after a difficult 2022 where activity declined significantly.
The rising cost of debt impacted investor activity so dramatically that sales fell from a record $479m in 2021 to $266.66m in 2022, a drop of 44%.
Lack of supply in Brisbane’s office market also led to the huge decline. There’s promise ahead however with high supply billed for 2023 as completion is expected to be highest in seven years. There is currently just under 17,000sqm under construction across four sites along the major office parks. New supply of just 7,088sqm was added across 2021-22. A further 10 developments have reached approval with Eight Mile Plains the location for four of these.
Knight Frank’s Brisbane Suburban Office Market Report February 2023 showed that despite the massive drop in sales, 2022 numbers still remained higher than pre-covid levels.
Report author and Knight Frank partner, research and consulting Queensland, Jennelle Wilson was impressed with the market’s ability to stay strong.
“Brisbane’s suburban market has proven to be quite resilient in the face of falling investment volumes across investment markets, which has come about due to the cost of debt increases,” Wilson said.
“While 2022 volumes were lower than 2021, the suburban market overall has seen a significant upswing in total transactions recorded across the region over the past two years.”
“The record $479 million recorded in 2021 was almost as much as the previous three years combined, from 2018 to 2020.”
The market that saw the most office sales of $10m+ in 2022 was Suburban North while the CBD market has dominated the investment sales of $10m+.
Knight Frank director, head of investment sales in Queensland Blake Goddard says the Brisbane suburban market is growing into an important asset class for investors.
“Recent sales activity has been dominated by modern or brand new stock in Hamilton or Cannon Hill which have seen the majority of suburban office park activity in recent months.”
“The sector is dominated by domestic buyers, but overall there is broad buyer demand, ranging from private investors through to smaller REITs and wholesale funds, which should assist to return volume to the sales market in 2023.”
“Suburban office investments are attractive to those seeking exposure in the office market at a lower price point and outside the CBD and surrounds,” he added.
