Business moves back to the CBD but now a new problem has emerged
Brisbane’s CBD office vacancy rate was falling but the next issue may be a lack of supply with only three office towers coming into the market over the next four years.
A general view of the Brisbane CBD, (AAP Image/Glenn Campbell)
The Property Council’s latest data showed the vacancy level in the city was down to 11.6 per cent, from 12.9 per cent at the start of the year and the city was only one of two markets to show a decrease.
The council’s Queensland executive director Jen Williams said Brisbane was defying a downturn seen in other capitals and there was positive sentiment from business.
“The demand for office space is not isolated to the CBD with Brisbane’s fringe market recording a decrease in vacancy, albeit a marginal one,’’ Williams said.
The fringe vacancy rate was about 15 per cent. The Gold Coast vacancy was about 6 per cent and was one of only two of the markets tracked by the council that was in single figures.
The demand in Brisbane in the first six months of the year was the strongest nationally and almost triple its historical average.
“While the interest in Brisbane is welcome, servicing demand will be problematic.’’
She said labour pressures and construction constraints were a challenge for the market and Brisbane had the lowest level of supply of all cities.
“Unless supply can match demand vacancy will continue to decrease which will in turn provide tenants less options and place pressure on rents.
“In the current high construction cost environment office projects are extremely difficult to get out of the ground and it is hard to see any reprieve on the horizon.
“It is also worth noting that while there may still be space available it less likely to be the higher-end contiguous space that appeals to large tenants and multi-nationals.”
“With all the hype around Brisbane and the Olympics this is a clear gap in the market that Brisbane will need to respond to if we want to maximise the economic benefits of the 2032 Brisbane Olympic and Paralympic Games.
Williams said there was no new supply to come online in the CBD until 2025 when 360 Queen Street and 205 North Quay were expected to be completed.
“Following that there is another two years until Waterfront Brisbane is completed in 2027,’’ Williams said.
“As such, supply will likely remain limited for the foreseeable future.
“This latest data clearly shows that businesses and investors are very interested in Brisbane, however, if we wish to maximise this and ensure our economy benefits from the companies looking to move here, we need to have space for the to move to.’’
