CBD office rents to skyrocket while Australia Post is spending $50m on airport parcel facility

Skyrocketing CBD tower rentals, Australia Post’s new cutting-edge $50m airport facility and a media family’s heritage-listed buy, here are some of Qld’s hottest commercial property deals this week

The prices businesses are willing to pay to work out of the CBD’s best office towers are skyrocketing as the lack of new supply in the pipeline bites.

CBRE senior managing director Queensland Chris Butters said there has been a “massive jump” in premium office tower rental rates.

“Premium building rents have reached the $1000/sqm mark and are getting towards $1100/sqm,” he said.

“I reckon by the end of this decade rents are going to get to $1300/sqm to $1500/sqm for new developments and premium buildings.

“We’re finding that more tenants are recentralising from secondary precincts into core locations and they’re now demanding a lot from their premises in terms of building amenity, wellness and collaboration spaces to encourage staff back into the city.”

According to the Property Council’s figures in the six months to January 2024, Brisbane’s CBD vacancy rate increased fractionally from 11.6 per cent to 11.7 per cent.

Vacancies in the Prime segment – Premium and A-grade – were 10 per cent and are forecast to reach 8 per cent by the end of the year.

CBRE managing director Chris Butters on Eagle St in the Brisbane CBD.

Mr Butters said heightened construction costs were negatively impacting new office development feasibilities and construction timelines to complete new towers has increased from three to four years.

An A-grade office tower at 205 North Quay will be completed by the end of the year, the Premium 360 Queen tower by the middle of next year and the Premium North Tower of Waterfront Brisbane by 2028.

“There is nothing else under construction. We won’t see any new building probably by the end of the decade,” Mr Butters said.

“Pre-commitment thresholds to commence construction are now a minimum of 50 per cent and finding capital partners is incredibly challenging.”

Mr Butters said the Brisbane CBD had become a “tale of two markets”.

“The prime market will remain buoyant and strong and the secondary market will have an increased level of obsolescence and an increasing level of alternative uses found for the buildings like student accommodation, residential and Build-to-Rent,” he said.

Postman delivers

Australia Post has committed more than $50m to build a cutting-edge parcel delivery facility which is due to open at the Brisbane Airport Industrial Park in early 2026.

The state-of-the-art StarTrack premium facility will be the second largest sorting facility in Queensland and will process up to 176,000 parcels daily by reducing touch points and manual handling through the installation of both a large and small parcel sorter, each equipped with integrated X-ray screening.

Australia Post Group chief executive Paul Graham said the construction of the new facility highlighted Australia Post’s commitment to investing in infrastructure that supports the changing needs of its customers and the growth of its business.

“Queensland continues to experience year-on-year eCommerce growth, with 82 per cent of

Queenslanders making an online purchase in the past year,” he said.

“This new parcel facility will help us respond to that demand and deliver parcels to customers’ doors sooner.”

The 33,600sqm Brisbane North Parcel facility will be 5-Star Green Star accredited.

Brisbane Airport chief executive Gert-Jan de Graaff said it will be the largest industrial

project ever constructed at Brisbane Airport.

“By providing Australia Post with direct airside access, we’re streamlining the delivery of time-sensitive parcels, benefiting millions of Queenslanders in the South East and regional areas of the state,” he said.

“Not only do we offer direct tarmac access, but Brisbane’s arterial road network is right on our doorstep.”

Australia Post will also work alongside the Australian Border Force and the Department of Agriculture Fisheries & Forestry at the Brisbane North Parcel facility as an International Gateway Operation.

An artist's impression of Australia Posts $50m parcel facility at the Brisbane Airport Industrial Park.

Heritage Star

The new owner of a heritage-listed Victorian style warehouse in the heart of the Brisbane CBD plans to restore the building and fullfil its potential.

Horton Media Australia – controlled by the Horton family – paid $5.5m for the vacant classical five-storey building at 47 Edward St which made up half Spencers Building that was built in 1890.

Managing director Matthew Horton said it was exciting to secure such a rare and historic piece of the Brisbane CBD.

“I’m looking forward to restoring the building and fulfilling its potential,” he said.

“It would make a prominent home for a high-end retailer or similar tenant seeking exposure to this prestigious corner of the city.”

Savills’ Gregory Woods, who marketed the property through and expressions of interest campaign with Daniel Pepper, said the building was sold as a mortgagee in possession.

“It’s rare to see buildings like 47 Edward St come to market, particularly given its distinctive characteristics,” he said.

“With its classical styling, proximity to key transport links, retail precincts and Brisbane’s city

centre, it was no surprise the property received the level of interest it did during the sales

campaign.”

The property has 6.2m ceiling height on the ground level with 3.6m on other levels as well as

austere classical detailing in both rendered and unrendered brickwork throughout. With a 772sqm of building area, the property enjoys has 8.5m of frontage to both Edward St and Spencer Lane to its rear.

Mr Woods said the upper levels may be refurbished for a residence because of its similarities to a New York loft apartment.

According to CoreLogic the property last changed hands in 2021 for $5.75m plus GST.

A five-storey heritage-listed building at 47 Edward St in the Brisbane CBD sold for $5.5m to Horton Media Australia.

Retail purchase

A West Australian fund manager has closed out its latest diversified commercial property fund with the acquisition of a convenience centre west of Brisbane.

Westbridge’s Diversified Fund No. 4 has recently settled on the $23m purchase of the

Redbank Plains retail centre at 588 Redbank Plains Rd, bringing its total assets under management to close to $125m. It is the fund’s eighth and final asset.

Westbridge Funds Management head of capital transactions Simon Worth said they saw an opportunity with the retail centre’s easing profile linked to a blend of CPI and fixed review structures,

“The Fund’s defensive income profile has been a key part of our strategy in safeguarding against the current high inflation environment,” he said.

“Moreover, the centre is located within one of Australia’s fastest growing local government areas, aligning with our mandate to acquire assets in locations with long-term capital growth potential.”

The deal was struck by CBRE’s Michael Hedger and Joe Tynan. According to CoreLogic the property last changed hands in 2021 for $25.4m.

It has an expansive land holding of 1.53ha and a floor area of 1613sqm plus a 5227sqm licence area. It has a fully leased net income of $1.48m a year.

The well-established premium convenience retail site has more than 89 per cent of income secured to national and global retailers.

It was sold on a weighted average lease expiry of 6.27 years, the centre’s tenants include Ampol, Krispy Kreme, Zarraffa’s Coffee and popular global burger chain, Carl’s Jr, alongside several complementary retailers.

The Redbank Plains Retail Centre at 588 Redbank Plains Road west of Brisbane.

Originally published as CBD office rents to skyrocket while Australia Post is spending $50m on airport parcel facility