Property Council’s latest Brisbane CBD office survey has seen the vacancy rate increase with the inclusion of 300 George St

The opening of a 41-storey office tower in the Brisbane CBD has impacted on the vacancy rate but demand remains strong.

DESPITE strong demand from tenants the Brisbane CBD office vacancy rate rose over the last six months with the completion of a major tower adding more space to the market.

The Property Council of Australia’s latest Office Market Report found the CBD vacancy rate increased to 12.7 per cent, from 11.9 per cent in July last year.

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

Deka Immobilien Investments will pay $380m for a 30-storey office tower at 66 Eagle St in the Brisbane CBD

A wave of new office towers under construction will put pressure on the vacancy rate in the Brisbane CBD

Property Council Queensland executive director Chris Mountford said the rise was caused by the opening of the 41-storey office tower at 300 George St.

However, he said the underlying strong office demand was a positive sign.

“High tenant demand has seen 23,581sq m absorbed over the past six months — a great

indicator of healthy activity in the office sector,” he said.

“This is well over double the historical average of Brisbane CBD’s office demand and has

been concentrated in the premium and A-grade market segments.”

Since July 2016, when the Brisbane CBD office vacancy rate peaked at 16.9 per cent, the Property Council’s biannual survey has reported a continued tightening of the market.

Knight Frank partner and joint head of Office Leasing Queensland Mark McCann said despite the rise in vacancy improved office market conditions were expected to remain.

“The resource and mining sector are expected to continue growing and both the Commonwealth and State governments will be active in 2020 in Brisbane, adding to the demand for space,” he said.

“Major infrastructure projects like Cross River Rail and Brisbane Metro are continuing to have positive impacts on the office market in the short to medium by creating more tenant demand.”

An artist's impression of the Midtown Centre.

Mr McCann said future new supply is in the CBD will remain constrained with only Midtown Centre, which will be completed in the first half of 2021 and Suncorp’s headquarters at 80 Ann St which will be finished in the first half of 2022, expected to make a significant impact.

The Brisbane Fringe market’s vacancy decreased marginally over the last six months of 2019,

falling to 13. 7 per cent, from 13.8 per cent.

Mr Mountford said the withdrawals of space in Brisbane’s fringe for redevelopment has been the primary cause of this vacancy reduction, with tenant demand negative in all grades except for A-grade stock.

“Almost 80,000sq m of new office space is expected to come online in the Brisbane Fringe

over the next few years,” he said.

“We’re seeing a definite flight to quality both in the Brisbane CBD and Brisbane Fringe

markets, this will open up great redevelopment and repositioning opportunities in 2020 for

older assets.”