Property Council’s warnings over CBD office shortages leading to Brisbane Olympics

The property industry warns Brisbane is facing office vacancy shortages, with little earmarked to improve this in the years leading up to the Brisbane Olympics.

Brisbane’s CBD could run out of office space in the coming years.

A significant shortage of commercial office developments will affect Brisbane’s ability to service the influx of white collar workers in the lead up to the 2032 Games, new data reveals.

Brisbane’s office vacancy of 10.2 per cent remains well below the national average and the Property Council of Australia tips the vacancy rate will remain low for a decade as new construction projects take years to reach completion.

Property Council Queensland executive director Jess Caire said a shortfall of new commercial projects in the pipeline proved the need to act quickly.

“It has never been more difficult or taken longer to build large scale buildings, with it currently taking a bare minimum of four years to build a 50,000 sqm building, so it is imperative to start looking for ways to stimulate new office projects,” she said.

“As we look at Brisbane’s growth and the scale of what will be required to meet that demand, now is the time for a targeted investment attraction package that includes reviewing our planning settings and an overhaul of our prohibitive tax settings to kickstart private development.”

Brisbane’s vacancy rate increased less than 1 per cent within the past six months, largely due to businesses changing their leases.

Ms Caire said targeted investment packages and establishing favourable tax incentives would be needed to lure private development.

While there would be increased supply through the completion of two office towers, 205 North Quay and 360 Queen St, Ms Caire said it would offer only a short-term solution.

Only Dexus’s $2.5bn Eagle St Waterfront redevelopment, due in 2028, will increase office supply before the 2032 Games.

“Given the projects coming out of the ground right now have been planned for almost a decade, if new office buildings are not already in the planning process it will be difficult for them to be delivered in time to service demand associated with hosting the 2032 Olympic and Paralympic Games,” Ms Caire said.

Real estate consultancy Knight Frank partner Jennelle Wilson said long-term tenants were preferring to renew and postponing relocation commitments, which was because of a lack of suitable options available in the next two years.

This meant landlords were benefiting from rent increases of an average 14 per cent in the past year, which meant increased cost burdens for CBD businesses.

Premium CBD offices had a vacancy rate of 7.3 per cent, while A-grade offices had a rate of 8.3 per cent.

Originally published as Property Council’s warnings over CBD office shortages leading to Brisbane Olympics