Brisbane metropolitan office sales reached a decade high in 2017 with leasing activity to push the market this year

Outside of the Brisbane CBD the metropolitan office market had a stellar 2017 and a spike in tenant requirements expected to drive the sector this year.

An artist's impression of the inside of the world's tallest engineered timber office building which will be built at 25 King St as part of the RNA Showgrounds redevelopment.

AFTER a stellar 2017 with the Brisbane metropolitan office sector recording its best sales performance in 10 years, a spike in tenant requirements is expected to drive the market this year.

According to Colliers International, last year sales hit a decade high with 29 significant transactions outside of the CBD totalling $1.5 billion.

A couple of the more notable deals in the last quarter were Singaporean based group Ascendas Real Estate Investment Trust paying $106.23 million for 108 Wickham St, Fortitude Valley, and AMP Capital spending $125.9 million on the Gasworks office portion at 84 Longland St, Newstead.

Colliers’ research found that based on dollar volumes, metro office sales were 51 per cent higher in 2017 than the previous year.

Colliers International office leasing national director Bo Veivers said Brisbane metro had a “fast start” to the year, with a good level of tenant inquiry.

“I don’t think I have seen this number of tenant briefs in the market for quite some time,” he said. “With the flow over from 2017 and fresh activity in 2018, there are a number of developers now looking at converting residential sites into commercial developments.”

One of the biggest current briefs outside of the CBD at the moment is Technology One’s 12,500sq m requirement.

It is currently looking at a shortlist of Alceon’s campus style development at Hamilton Northshore, Lendlease’s RNA showground redevelopment or staying at 540 Wickham St.

Colliers International researcher Helen Swanson said currently Milton had the highest vacancy rate, followed by Spring Hill, Toowong, Urban Renewal project areas, and the Inner South.

She said forecasts suggest vacancy rates for the metro market could be between 15 and 16 per cent by mid-2018, up from 14.1 per cent in January this year.

But vacancy rates are expected to drop in the medium to long term.

“In the last half of 2017 investors had begun to realise that the office leasing market had turned the corner, and an organic uplift in rental values may now be a possibility,” Ms Swanson said.