CBD vacancy increases despite strong office demand

The Property Council of Australia’s latest Office Market Report has revealed an increase in the vacancy levels of Brisbane CBD, despite recording a historically strong level of office demand.

Released today, the Office Market Report recorded the CBD vacancy rate increasing from 11.9 percent in July 2019 to 12.7 percent in January 2020. 

Chris Mountford, Queensland Executive Director of the Property Council, said, “The headline vacancy figure has been caused by the addition of the 300 George Street office tower to the market, but the underlying strong demand is an extremely positive sign for the city’s economy.”

“High tenant demand has seen 23,581sqm absorbed over the past six months – a great indicator of healthy activity in the office sector,” Mr Mountford said.

“This is well over double the historical average of Brisbane CBD’s office demand and has been concentrated in the Premium and A Grade market segments.

“With an additional 55,000sqm of space due to come online over the next two years, the market will be hoping for a continuation of this strong tenant demand for quality Brisbane CBD properties.”

The Brisbane Fringe market’s vacancy decreased marginally over the last six months of 2019, falling from 13.8 per cent to 13.7 per cent.

Withdrawals of space in Brisbane’s fringe for redevelopment has been the primary cause of this vacancy reduction, with tenant demand negative in all grades except for A Grade stock.

“Almost 80,000sqm of new office space is expected to come online in the Brisbane Fringe over the next few years,” Mr Mountford said.

“We’re seeing a definite ‘flight to quality’ both in the Brisbane CBD and Brisbane Fringe markets, this will open up great redevelopment and repositioning opportunities in 2020 for older assets.”

Media contact: Chris Mountford | M  0408 469 734 |  E  cmountford@propertycouncil.com.au

 

Office Market Report January 2020

Analysis – Brisbane CBD market

Headline comments:                                

  • Brisbane CBD vacancy increased in the six months to January 2020
  • This was due to supply additions
  • Demand was still positive
  • Positive demand was concentrated in the upper grades of space
  • There is over 55,000sqm of space due to come online over the next 2 years

 

Vacancy analysis:

  • Brisbane CBD’s vacancy rate increased from 11.9 percent to 12.7 percent
  • This was due to 50,958sqm of supply additions
  • Demand over the period was still positive, with 23,581sqm of net absorption recorded
  • Positive demand was concentrated in the upper grades of space
  • With exception of Premium, all grades of space have vacancy above 13 percent

 

Future supply:

  • 11,239sqm of space is due to come online in 2020
  • This will be followed by 44,000sqm in 2021
  • 81,640sqm is in pipeline to be delivered from 2022 onwards
  • 54,292sqm of space is mooted

 

Key market indicators, Brisbane CBD (aggregate)

Grade

Vacancy,

Jan 20 (%)

Vacancy,

Jul 19 (%)

Net absorption, 6 months to

Jan 20 (sqm)

Premium

3.2

8.7

18,480

A

13.7

10.4

11,809

B

14.3

14.1

-944

C

16.6

14.9

-4,130

D

21.0

15.1

-1,634

Total

12.7

11.9

23,581

 

Office Market Report January 2020

Analysis – Brisbane Fringe market

Headline comments:

  • The Fringe market’s vacancy decreased marginally over the period
  • This was due to withdrawals
  • Demand was negative
  • All grades have double digit vacancy
  • There is significant amount of space due to come online in 2021

 

Vacancy analysis:

  • Brisbane Fringe’s vacancy decreased marginally from 13.8 percent to 13.7 percent
  • This was due to 3,895sqm of withdrawals
  • Demand was negative, with -1,627sqm of net absorption recorded
  • All grades of space have vacancy above 10 percent
  • Only the A Grade segment recorded positive net absorption over the period

 

Future supply:

  • 19,276sqm of space is due to come online in 2020
  • This will be followed by 35,966sqm in 2021
  • 24,000sqm is due to come online from 2022 onwards
  • 129,438sqm is mooted for this market

 

Key market indicators, Brisbane Fringe (aggregate)

Grade

Vacancy,

Jan 20 (%)

Vacancy,

Jul 19 (%)

Net absorption, 6 months to

Jan 20 (sqm)

A

10.4

11.1

4,588

B

17.0

16.6

-5,056

C

15.7

15.0

-1,159

D

40.7

40.7

0

Total

13.7

13.8

-1,627