Aged Brisbane office stock converted

Aged Brisbane office stock convertedA high level of withdrawals in near-city office stock to facilitate residential conversions will have positive flow-on effects for landlords with space to lease, a new analysis shows.According to new research from CBRE, at least 55,000 sqm of office stock from Brisbane’s near-city market will be withdrawn to accommodate residential development over the next two years – and it will be a boon for near-city landlords, with displaced tenants seeking new leases. This amounts to 12 office buildings being withdrawn from the market by 2016, of which 10 are earmarked for residential conversion.”We expect the volume of stock being withdrawn will only increase as office owners who have experienced significant lease-up timeframes look for alternative exit strategies,” CBRE’s Office Services senior negotiator Mel Pikos said.”The large amount of space being withdrawn from the market could account for a further positive take-up of 20,000 sqm of currently vacant space from occupiers looking to relocate in a tighter marketplace.”According to CBRE, numerous near-city tenants have already upgraded their office accommodation, migrating from buildings slated for redevelopment to newer Grade-A stock. This includes a move by the Australian Federal Police, which recently vacated its 00 sqm office in Spring Hill for a 4075 sqm near-new space in Newstead.”These examples reveal the increasing trend for businesses to relocate in near-city regions to benefit from the facilities of newer [Grade-A] buildings,” Pikos noted.CBRE forecasts the market will also benefit from the limited pipeline of new office stock, citing Charter Hall’s newly completed and largely committed office project at 100 Skyring Terrace, and the fact that only two other tower projects are under construction at the moment: Anthony John Group’s 23,528 sqm Southpoint development, fully pre-committed to Flight Centre; and Lend Lease’s 16,595 sqm K1 project at Fortitude Valley.”This limited and largely committed development pipeline, coupled with the high number of [Grade-B and Grade-C] buildings being withdrawn from the market, should ensure that net absorption levels in the near-city market continue to improve in the short to medium term,” Pikos said.CBRE said withdrawals to date have primarily involved ageing buildings that are set for residential development – a trend gaining momentum due to strong interest from Asian developers. According to CBRE, acquisitions by Asian developers surpassed $370 million in Brisbane sites in the past 12 months.