Brisbane’s office market was a surprise performer last year, with hopes the good news will roll on in 2016.
According to JLL Research statistics for the final quarter of 2015, the Brisbane CBD was one of the markets nationally to perform above expectations and recorded four successive quarters of positive net absorption.
JLL recorded net absorption in the Brisbane CBD of 11,300sqm in Q4 and a total of 26,600sqm throughout 2015.
The annual result was only 4700sqm below the 40-year average of 31,300sqm for net absorption in the Brisbane CBD.
JLL’s head of strategic research Australia, Andrew Ballantyne says tenants are taking up more space within their own buildings to accommodate predicted staff growth.
“While leasing volumes remain thin in Brisbane, a reduction in sub-lease availability from 3.28% of total stock in 2014 to 1.44% in 2015 provides tangible evidence that companies are willing to retain excess space in anticipation of modest headcount growth in the short-term,” Ballantyne says.
Brisbane CBD surprised on the upside with a sharp reduction in sub-lease availability over 2015
Brisbane’s results compare to national figures that showed positive net absorption of 26,700sqm during the quarter across CBD office markets and 296,900sqm over the past 12 months.
Nationally the net absorption result for 2015 was about 100,000sqm higher than the 20-year average for CBD office markets.
But the availability of backfill space from tenant relocations to new development stock resulted in the national CBD office market vacancy rate increasing to 12% to 12.6% compared to the previous quarter.
“Employment growth was strongest in New South Wales and Victoria and this was reflected in above trend net absorption results for the Sydney and Melbourne CBDs in 2015,” Ballantyne says.
“However, the Brisbane CBD surprised on the upside with a sharp reduction in sub-lease availability over 2015.”
JLL’s head of office leasing Australia, Tim O’Connor says that while Sydney will continue to see an easing of leasing incentives, this would not necessarily be the case elsewhere.
“Vacancy pressures in Perth, Adelaide and Brisbane will require owners to commit capital expenditure to reposition assets to ensure that they remain relevant in competitive leasing markets,” O’Connor says.
Companies are willing to retain excess space in anticipation of modest headcount growth in the short-term
Office space currently on the market in Brisbane includes the entire Level 2, 21 Mary Street, which is located within the popular Queens Wharf precinct.
The 380sqm fully fitted office floor is being marketed by Savills for $1.595 million, with the current gross rent listed at $126,533 plus GST per annum.
Colliers International is also seeking offers to purchase the fully leased South Central Commercial building, located at 43 Peel St, South Brisbane, which boasts 2827sqm of net lettable area.
Located just 800m outside of the Brisbane CBD grid, the office and retail facility was developed by Forrester Properties in 2008 and has been owned and managed by them until now. It is listed with an annual net income of $1.404 million ex-GST.