A surge in major tenant inquiry is set spark a new wave of Brisbane CBD office tower construction

Major employers are reviewing the office needs for thousands of public servants which could spark a wave of new Brisbane towers.

Up to 13,000 public servants could be on the move with major government employers reviewing their future workplace office needs.

Services Australia, formerly the Department of Human Services, has a 35,000sq m requirement in the market while sources say the Brisbane City Council, the State Government-owned corporation Energy Queensland and Queensland Rail are also reviewing their future workplace needs worth in total about 110,000sq m.

If they all go on to decide to actually move, between 11,000 to 13,000 public servants could be relocating sparking the need for billions of dollars of new office tower construction in the CBD and potentially Fortitude Valley.

In particular it will drive a need for ‘contiguous space’ meaning multiple floors big enough to hold large organisations.

CBRE managing director — Brisbane Chris Butters said there will be “a significant amount” of major tenant inquiries coming to the market in the coming months.

“We’re starting to see a resurgence in brokerage inquiry and large format groups are beginning to look at their long-term office accommodation strategies with more vigour,” he said.

“But what is really thin on the ground is that the prime grade market is still tight for contiguous space options that occupiers will require in the next five years.”

CBRE expects the Brisbane CBD office vacancy rate to peak at around 16 per cent by the end of the year or in early 2022.

However, with Suncorp’s new headquarters at 80 Ann Street to be completed next year, there will no new CBD towers scheduled for construction, creating a looming lack of new A-grade supply although there is a raft of options for new tenants.

Services Australia has a shortlist of five likely candidates for the consolidation of half a dozen offices in a brand new office tower in the CBD.

The shortlist is:

* Charter Hall/Investa’s proposed 28-level tower at 360 Queen Street;

* ISPT’s long mooted office 40 storey tower on the former Regent Cinema site on the Queen Street Mall;

* The Nielsen Properties/Cbus planned 38-storey tower at 205 North Quay;

* Mirvac’s proposed $670m tower at the State Government owned old University of Queensland Dental School site 168-200 Turbot Street;

* Charter Hall’s proposed 25-level office tower at 343 Albert Street.

An artist's impression of the outdoor area at Charter Hall/Investa office tower at 360 Queen Street in the Brisbane CBD.

Industry sources say the Brisbane City Council is reviewing their office footprint of up to 35,000sq m, State Government-owned corporation Energy Queensland is looking at workplace future and may need 35,000sq m to 40,000sq m and Queensland Rail is considering their workplace needs of up to 35,000sq m.

The site for the Charter Hall/Investa proposed tower at 360 Queen Street has been cleared and will has a mooted 40,000sq m of space showcasing the very best in smart building technology, sustainability, embedded health and hygiene measures, wellness facilities and subtropical inspired design.

An artist's impression of the inside the CharterHall/Investa office tower at 360 Queen Street in the Brisbane CBD.

The proposed tower is on a number of shortlists prior to the coronavirus pandemic but with business sentiment improving it is figuring prominently in many future workplace scenarios.

Charter Hall’s QLD regional development director Bradley Norris said 360 Queen will be the leading example of next-generation, premium workplace in Brisbane.

“Interest in the development has been strong. Given the project is both shovel-ready and the only new development opportunity currently available for lease on Queen Street, we’re confident in securing major pre-commitments soon,” he said.

Brendan Looby, Fund Manager ICPF, Investa said 360 Queen Street was a standout project.

“The recent completion of demolition works on site, coupled with Queensland’s and Australia’s successful suppression of COVID-19 has led to growing leasing interest in the project,” he said.

“We are thrilled with the interest that 360 Queen Street has generated from the market so far with high levels of engagement from both public and private sector tenants.”

An artist's impression of the CharterHall/Investa office tower at 360 Queen Street in the Brisbane CBD.

Mr Butters said confidence has returned to the general business community after working through the COVID-19 pandemic.

“They’re looking at the future and are contemplating what they will need and we are only at the start of that cycle,” he said.

“Tenants will be seeking to entice their staff back into the office and they want a new development opportunities with significant amenity, technology platforms and digital infrastructure and a workplace that will invigorate their staff.

“We think that will lead to a new wave of construction because those planned buildings that will be built will have the ability to provide that requirement.”

An artist's impression of the retail lane way at CharterHall/Investa office tower at 360 Queen Street in the Brisbane CBD.

CBRE Asia Pacific head of office leasing Mark Curtain said after the events of the past 12 months employers will seek a change in direction.

“We will see more new construction as employers seek to reinvent the workplace experience for employees and new buildings will give them the platform to execute that strategy,” he said.

“Most people would think it will be a long time before we see another wave of construction but the reality is we’re on the precipice of a significant amount of building as a result of large requirements coming to market that are unlikely to be satisfied by existing stock.”