Brisbane CBD office vacancy tightens further to 11.9 per cent on the back of withdrawals and growing demand

The Brisbane office leasing market is improving with more demand and withdrawals and there are signs that rents may be on the rise.

OFFICE vacancy rates across Brisbane have continued to tighten in the first half of the year as space is withdrawn and demand improves.

The Property Council’s latest Office Market Report found that vacancy across the CBD was at 11.9 per cent, down on the 12.9 per cent recorded at the start of the year and 14.7 per cent 12 months ago.

Vacancy in the Brisbane fringe fell from 15.7 per cent to 13.8 per cent over the last six months.

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Property Council Queensland executive director Chris Mountford said the figures confirmed that Brisbane’s office market was recovering from record highs.

“Brisbane CBD is now at its lowest level of vacancy since July 2013, with strong demand recorded for premium and B-grade stock,” he said.

“While there has been some office buildings withdrawn from the market for redevelopment, new demand is playing a big role in bringing down the vacancy rate.”

According to the report in the six months 15,417sq m of space was withdrawn and there was 8947sq m of net absorption in the Brisbane CBD.

However, the vacancy rate will come under pressure in the future with the completion of the 300 George St tower and Dexus’ Annex building at 12 Creek St early next year and the Midtown Centre and Suncorp’s new home at 80 Ann St in another couple of years.

An artist's impression of the Shayher Group's 42-level office tower at 300 George St in the Brisbane CBD.

CBRE state director office leasing Chris Butters said a renewed sense of optimism was gathering momentum among office landlords as conditions continue to improve within the prime sector of both the CBD and the metro office markets.

“Post the federal election we have noticed a significant uptick in resource related requirements, co-working commitments and occupiers relocating from the CBD fringe and suburbs into the CBD,” he said.

JLL’s head of office leasing — Queensland, Adam Barrett said rental rates were improving.

“Gross rents have reached in excess of $734/sq m a year and this rental growth for prime assets has been attributed to a strengthening local economy, growing demand and a decreasing vacancy rate,” he said.

“Incentives have stabilised and are likely to tighten by year end.

“The tightening of prime market vacancy and a reduction in secondary vacancy is a reflection of the stable demand for office space within the Brisbane CBD and is being helped by withdrawals due to commencement of key infrastructure projects.”