Brisbane leasing market comes out swinging
Brisbane’s office leasing market is showing signs of improvement, with the city having experienced its biggest demand for office space since mid-last year.
According to the Colliers International’s Office Demand Index report, tenants sought 43,754sqm of office space in the first quarter of 2016 – the highest level in almost a year.
In fact, Brisbane saw an increase in all size segments when comparing demand from Q4 2015 to Q1 2016.
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Tenants looking for 3000sqm or more space saw the largest increase, jumping 200% for that same period, which Colliers says is positive considering the upcoming supply pipeline.
The average size sought also increased to 1287sqm for the quarter, up from 774sqm in the final three months of last year.
The future outlook continues to support strong offshore demand for quality office stock in the Brisbane market
Colliers says the volume of leasing transactions and inquiries is improving and the market is in a better position to this time last year, with recent sizeable transactions providing much needed positive net absorption.
Among the transactions is the State Government’s move into the AM60 tower at 42-60 Albert St and Tatts Group establishing its headquarters in the 180 Brisbane office tower at 180 Ann St.
But newly appointed state product director at Colliers, Tim Matthews, says landlords operating in the commercial sector need to have a firm understanding of the current market conditions and the competitive environment in which they are operating.
“Active tenants continue to focus on flight to quality when considering leasing options,” Matthews says.
“With the new supply continuing to be rolled out and the sub-lease market intensifying, landlords exposed to vacancy need to ensure they are strategically investing back in their assets to create attractive work environments.
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“The future outlook continues to support strong offshore demand for quality office stock in the Brisbane market.”
“This means there are great opportunities for landlords to review their disposal strategies for non-core assets or those that have reached the end of the asset life cycle to take advantage of the tightening sale yields being achieved.”
Active tenants continue to focus on flight to quality when considering leasing options
Colliers says Brisbane is continuing to generate strong interest from domestic and international buyers due to the arbitrage between yields in Brisbane and the southern cities of Sydney and Melbourne.
It is a trend Colliers is confident will continue with Brisbane’s strong relative yields proving attractive against a backdrop of lower global growth.
This year has already seen Singaporean based AEP Investment Management acquire 41 George St for $159.8 million and LaSalle Investment Management Asian Property Fund acquire 28 MacGregor St, in Upper Mount Gravatt, for $57.1 million.