BRISBANE’S office vacancy remains well below the national average at 10.2 per cent and will remain so for the foreseeable future due to limited future supply, according to the latest data from the Property Council of Australia.
Queensland Executive Director of the Property Council, Jess Caire, said Brisbane was facing a critical shortage of new office space in the medium to long term, and given how long it was taking to deliver new projects, it was imperative to address this looming supply shortage now.
“Vacancy rates in the South East Queensland office market have been below the national average for several years and it is difficult to see that changing given strong tenant demand and the lack of new supply due to the cost and complexity of delivering a new office building,” Ms Caire said.
“This year we will have 205 North Quay and 360 Queen Street provide some relief in terms of adding new supply to the market and then in 2028 Waterfront will be delivered – however there is nothing after that.
“Given the projects coming out of the ground right now have been planned for almost a decade, if new office buildings are not already in the planning process, it will be difficult for them to be delivered in time to service demand associated with hosting the 2032 Olympic and Paralympic Games.”
Ms Caire said while Brisbane saw a slight increase in vacancy of 0.7 per cent compared with last year, the shortfall of new commercial projects in the pipeline highlighted the need to act now.
“It has never been more difficult or taken longer to build large-scale buildings, with it currently taking a bare minimum of four years to build a 50,000 sqm building, so it is imperative to start looking for ways to stimulate new office projects,” she said.
“As we look at Brisbane’s growth and the scale of what will be required to meet that demand, now is the time for a targeted investment attraction package that includes reviewing our planning settings and an overhaul of our prohibitive tax settings to kickstart private development,” Ms Caire said.
Knight Frank Partner Jennelle Wilson explained that the increase in CBD office vacancy was not reflective of the recent momentum in Brisbane’s office market.
“The overall sentiment in Brisbane’s office market is very buoyant,” Ms Wilson said.
“Brisbane leads to country in terms of the underlying fundamentals of its office market.
“Private sector tenant conservatism, which emerged mid-year, saw leasing decisions firmly veer towards renewals, delaying longer-term re-location commitments where possible. This was also due to a perceived lack of suitable options in the 2025-2027 timeframe.
“As a result, landlords have benefitted greatly from rental reversions, with gross effective prime market rents up by 14 per cent in the past year, and 25 per cent over the past two years.
“Tenants are consistently seeking to provide a better workplace experience for staff while balancing cost pressures within the currently subdued economy.
“Upgrading remains a central theme, with premium CBD vacancy (7.3 per cent) and A grade CBD (8.3 per cent) remaining tight, despite the recent uplift.
“This trend is also in full effect across the Fringe market with A grade vacancy falling below 10 per cent, to 9.7 per cent, for the first time in nine years. This was due to sustained positive net absorption across the Urban Renewal, Inner South and Milton precincts.”
