Marginal increase in office vacancy underlines the need to support CBDs

The Property Council of Australia’s latest Office Market Report has reinforced the Brisbane office market’s resilience in the face of COVID-19, with only a moderate increase in office vacancy seen over the six months to January 2021.

Released today, the Office Market Report recorded Brisbane’s CBD vacancy rate increasing marginally, from 12.9 per cent in July 2020 to 13.6 per cent in January 2021, and the vacancy in Brisbane’s fringe market increasing from 14.3 per cent to 16.6 per cent over the same period.

Chris Mountford, Queensland Executive Director of the Property Council, said, “The figures show Queensland’s office market has fared remarkably well during this tumultuous time.”

“Clearly the health restrictions and economic downturn caused by COVID-19 had a significant impact on commercial property in 2020, with many workers hesitant to return to their places of work,” he said.

“This is despite the significant lengths that building owners and managers have gone to ensure workplaces are safe and ready to welcome workers back.

“As our office markets adapt to a ‘COVID-normal’ setting, business and government have a critical role to play in supporting the return to office workplaces and helping more people come back to office precincts.

“Despite talk of a flight from the CBD in response to COVID-19, non-CBD markets across the country also saw increases in vacancy, indicating that widespread health restrictions across all workplaces and the economic downturn caused by the pandemic were strong prevailing influences, rather than an aversion to CBD offices.

“Vibrant CBDs are the engines of investment, growth and productivity and must be a focus of the State’s economic recovery,” Mr Mountford explained.

Additional supply was expected to be added to the Brisbane office market in 2021 with 44,000 sqm due to be added to Brisbane’s CBD and an additional 45,266 sqm due to come online in Brisbane fringe market this year.

“With more than 80,000 sqm of office space due to come online in the CBD next year, it will be crucial for the wider economy that we reverse the current negative trend in demand,” Mr Mountford said.

Office vacancies are calculated on whether a lease is in place for office space, not whether the tenant’s employees are occupying the space or working from home.

Media contact: Chris Mountford|  M  0408 469 734 |   E [email protected]

Office Market Report January 2021

Analysis – Brisbane CBD market

Headline comments:                                

  • Brisbane CBD vacancy increased in the six months to January 2021
  • This was mainly due to negative demand
  • All grades of space recorded negative demand
  • There is over 125,000sqm of space due to come online over the next 2 years

Vacancy analysis:

  • Brisbane CBD’s vacancy rate increased from 12.9 percent to 13.6 percent
  • This was mainly due to -13,531sqm of net absorption
  • Supply additions over the period totalled 2,407sqm
  • All grades of space recorded negative demand
  • With the exception of Premium, all grades of space have vacancy above 13 percent

Future supply:

  • 44,000sqm of space is due to come online in 2021
  • This will be followed by 81,640sqm in 2022
  • 54,292sqm of space is mooted

 

Key market indicators, Brisbane CBD (aggregate)

Grade

Vacancy,

Jan 21 (%)

Vacancy,

Jul 20 (%)

Net absorption, 6 months to

Jan 21 (sqm)

Premium

6.8%

5.1%

-5,717

A

13.3%

13.1%

-268

B

16.0%

15.3%

-4,185

C

15.7%

14.6%

-2,726

D

27.1%

24.8%

-635

Total

13.6%

12.9%

-13,531

 

 

Office Market Report January 2021

Analysis – Brisbane Fringe market

Headline comments:

  • The Fringe market’s vacancy increased over the period
  • This was due to negative demand
  • The negative demand was concentrated in the upper grades of space
  • All grades have double digit vacancy
  • There is significant amount of space due to come online in 2021

Vacancy analysis:

  • Brisbane Fringe’s vacancy increased from 14.3 percent to 16.6 percent
  • This was despite 10,869sqm of withdrawals
  • Net absorption was -36,849sqm
  • The negative demand was concentrated in the upper grades of space
  • All grades of space have vacancy above 13 percent

Future supply:

  • 45,266sqm of space is due to come online in 2021
  • This will be followed by 24,000sqm in 2022
  • 24,000sqm is due to come online from 2023 onwards
  • 164,438sqm is mooted

Key market indicators, Brisbane Fringe (aggregate)

Grade

Vacancy,

Jan 21 (%)

Vacancy,

Jul 20 (%)

Net absorption, 6 months to

Jan 21 (sqm)

A

13.4%

11.4%

-12,109

B

20.5%

15.4%

-27,356

C

16.8%

20.8%

2,322

D

37.0%

40.7%

294

Total

16.6%

14.3%

-36,849