Positive Demand in Brisbane Office Market

The Property Council of Australia’s latest Office Market Report has revealed positive results for the Brisbane CBD, as vacancy rates decrease for the second consecutive period.

Released today, the Office Market Report recorded vacancy rates falling from 14.7 per cent in July 2018 to 13.0 per cent in January 2019. 

Chris Mountford, Queensland Executive Director of the Property Council, said, “This result is a product of positive tenant demand, combined with the withdrawal of half of the Brisbane Transit Centre - making way for the Cross River Rail project.”

“Brisbane has recorded the largest drop in office vacancy compared to any other State capital. High tenant demand has seen 25,192sqm absorbed over the past six months – a great indicator of positive activity in the economy,” Mr Mountford said.

“This high-level leasing activity has been concentrated in the A and B Grade segments, continuing the flight-to-quality pattern that has been established in previous years.

 “This is a strong result for the Brisbane CBD. With an additional 47,700sqm of space entering the market later this year, the City should be well placed to absorb this new supply.

“Positive tenant demand was also witnessed in the Brisbane Fringe, with 12,808sqm of net absorption recorded over the six months to January.

“While the vacancy rate edged up slightly, from 14.6 per cent to 14.8 per cent, the result can be largely attributed to 16,729sqm of supply entering the market.”

Vacancy rates have also decreased on the Gold Coast, from 12 per cent to 11.6 per cent, over the six months to January 2019.

“Market activity has been positive in the Robina-Varsity Lakes, Southport and Surfers Paradise locales, with 2,986sqm of net absorption being recorded across the Coast markets over the period. With little new stock on the horizon, vacancy rates can be expected to tighten further in 2019,” explained Mr Mountford.

“The Sunshine Coast has seen an increase in vacancy rates from January 2018, which can be attributed to new supply additions.

“Despite positive absorption of 5,334sqm, total vacancy on the Sunshine Coast increased from 15 per cent in January 2018 to 21.8 per cent in January 2019 - attributable to an additional 21,716sqm that has entered the market in the last 12 months.

“With a significant amount of new space mooted to enter the market once the Maroochydore CBD is established, it is vital further consideration is given to future demands of the Sunshine Coast office market, and potential alternative uses for space within the new CBD,” concluded Mr Mountford.

BELOW: Brisbane, Brisbane Fringe, Gold Coast and Sunshine Coast office market analysis

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

 

Office Market Report January 2019

Analysis – Brisbane CBD market

Headline comments:                                

  • Brisbane CBD vacancy decreased in the six months to January 2019
  • This was due to positive demand and withdrawals
  • The middle grades of space recorded positive demand
  • Negative demand was concentrated in the D Grade segment
  • There is over 100,000sqm of space due to come online from 2021

 

Vacancy analysis:

  • Brisbane CBD’s vacancy rate decreased from 14.7 percent to 13.0 percent
  • This was due to 25,192sqm of net absorption and 16,306sqm of withdrawals
  • Positive demand was recorded in the A, B and C grade segments
  • Negative demand was concentrated in the D Grade segment

 

Future supply:

  • 47,700sqm of space is due to come online in 2019
  • This will be followed by 7,200sqm in 2020
  • 114,540sqm is in the pipeline to be delivered from 2021 onwards

 

Key market indicators, Brisbane CBD (aggregate)

Grade

Vacancy,

Jan 19 (%)

Vacancy,

Jul 18 (%)

Net absorption, 6 months to

Jan 19 (sqm)

Net absorption, 12 months to

Jan 19 (sqm)

Premium

10.4

10.1

-954

7,429

A

9.9

11.7

16,537

27,157

B

17.4

20.8

10,938

19,417

C

14.1

15.3

2,480

-2,853

D

20.8

13.7

-3,809

-4,219

Total

13.0

14.7

25,192

46,931

 

 

Office Market Report January 2019

Analysis – Brisbane Fringe market

Headline comments:

  • The Fringe market’s vacancy increased over the period
  • This was due to supply additions
  • Demand was positive
  • All grades have vacancy above 13 percent
  • There is no supply due to come online after 2019

 

Vacancy analysis:

  • Brisbane Fringe’s vacancy increased from 14.6 percent to 14.8 percent
  • This was due to 16,729sqm of supply additions
  • Demand was positive with 12,808sqm of net absorption recorded
  • All grades of space have vacancy above 13 percent
  • Only the D Grade segment recorded no net absorption over the period

 

Future supply:

  • 25,699sqm of space is due to come online in 2019
  • There is no other space in the pipeline over the medium term
  • 100,470sqm is mooted for this market

 

Key market indicators, Brisbane Fringe (aggregate)

Grade

Vacancy,

Jan 19 (%)

Vacancy,

Jul 18 (%)

Net absorption, 6 months to

Jan 19 (sqm)

Net absorption, 12 months to

Jan 19 (sqm)

A

15.0

14.5

9,004

-11,565

B

13.5

13.9

3,505

2,264

C

14.4

14.6

299

2,753

D

58.2

58.2

0

-2,100

Total

14.8

14.6

12,808

-8,648

 

Office Market Report January 2019

Analysis – Gold Coast market

Headline comments:

  • Vacancy in the Gold Coast office sector decreased over the six months to January 2019
  • This was due to positive demand
  • All grades of space have double digit vacancy
  • The Robina-Varsity Lake, Southport and Surfers Paradise locales recorded positive demand
  • There is no space due to come online from 2020 onwards

 

Vacancy analysis:

  • Vacancy decreased from 12.0 percent to 11.6 percent over the six months to January 2019
  • The vacancy decrease was due to 2,986sqm of net absorption
  • 892sqm of space was added over the period

 

By grade:

  • A Grade – vacancy in this segment decreased from 13.1 percent to 11.9 percent due to net absorption of 1,583sqm
  • B Grade – vacancy increased from 10.4 percent to 11.0 percent due to 892sqm of supply additions and -222sqm of net absorption
  • C Grade – vacancy in this segment decreased from 13.6 percent to 12.3 percent due to net absorption of 1,662sqm
  • D Grade – vacancy increased from 10.4 percent to 10.7 percent due to -37sqm of net absorption

 

By locale:

  • Broadbeach – vacancy increased from 4.4 percent to 9.9 percent due to 892sqm of supply additions and -829sqm of net absorption
  • Bundall – vacancy remained steady at 9.4 percent
  • Robina-Varsity Lakes – vacancy decreased from 13.3 percent to 12.0 percent due to net absorption of 1,691sqm
  • Southport – vacancy decreased from 14.4 percent to 13.6 percent due to 1,153sqm of net absorption
  • Surfers Paradise – vacancy decreased from 11.3 percent to 9.8 percent due to 1,008sqm of net absorption

 

Future supply:

  • There is 2,832sqm of space due to come online in 2019
  • No projects are due to be completed from 2020 onwards over the medium term
  • A total of 5,100sqm of projects are mooted

 

 

Key market indicators, Gold Coast (aggregate)

Grade

Vacancy,

Jan 19 (%)

Vacancy,

Jul 18 (%)

Net absorption, 6 months to

Jan 19 (sqm)

Net absorption, 12 months to

Jan 19 (sqm)

A

11.9

13.1

1,583

-3,923

B

11.0

10.4

-222

3,038

C

12.3

13.6

1,662

-537

D

10.7

10.4

-37

148

Total

11.6

12.0

2,986

-1,274

 

 

Key market indicators, Gold Coast (by locale)

Locale

Vacancy,

Jan 19 (%)

Vacancy,

Jul 18 (%)

Net absorption, 6 months to

Jan 19 (sqm)

Net absorption, 12 months to

Jan 19 (sqm)

Broadbeach

9.9

4.4

-829

-170

Bundall

9.4

9.4

-37

2,053

Robina-Varsity Lakes

12.0

13.3

1,691

-4,115

Southport

13.6

14.4

1,153

-570

Surfers Paradise

9.8

11.3

1,008

1,528

 

Office Market Report January 2019

Analysis –Sunshine Coast market

Note – analysis is the year to January 19

Headline comments:

  • Vacancy in the Sunshine Coast increased in the 12 months to January 2019
  • This was due to supply additions
  • Demand was still positive
  • No space is in the pipeline over the medium term after 2019

 

Vacancy analysis:

  • Total vacancy increased from 15.0 percent to 21.8 percent in the year to January 2019
  • This was due to 21,716sqm of supply additions
  • Demand was still positive with 5,334sqm of net absorption recorded

 

Future supply:

  • 765sqm of space is due to come online in 2019
  • There is no space in the pipeline to be delivered over the medium term post-2019
  • 3,880sqm is mooted

 

Key market indicators, Sunshine Coast (aggregate)

Grade

Vacancy,

Jan 19 (%)

Vacancy,

Jan 18 (%)

Net absorption, 12 months to Jan 19 (sqm)

Net absorption, 12 months to Jan 18 (sqm)

A

30.6

20.0

3,605

7,427

B

9.8

9.0

1,566

1,038

C

13.8

11.8

163

-1,396

D

0.0

0.0

0

70

Total

21.8

15.0

5,334

7,139