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  • Premium gross effective rents in the Brisbane CBD rose by 3.1% to $560 during the quarter
  • However, incentives remainied stable
  • Rents were largely unchanged across Perth and Melbourne

Following an extended period of flat office rents, Cushman & Wakefield has revealed that the Brisbane CBD office market recorded solid growth across all grades during the second quarter of 2022.

Premium gross effective rents in the Brisbane CBD rose by 3.1% to $560 during the quarter amid higher tenant demand, which has taken year-on-year rental growth to 3.3%.

Although gross rents increased, incentives remained stable at around 37%. BDO pre-committing to 9,000 sqm at 360 Queen Street – which is due for completion in 2025 – represented a key transaction in the market.

Sydney rents recorded modest growth, while rents remained largely unchanged across Melbourne and Perth.

Sydney CBD recorded a 1.8% increase over Q2 to $905 sqm, which equates to a 2.1% year-on-year increase, with incentives remaining at around 35%.

Increased demand for quality assets has caused a 1.3% quarterly increase in prime grade face rents. Key transactions in Sydney include The Commons, which has taken out 3,975 sqm in 388 George, and JWS which has leased 3,7000 in 50 Bridge Street.

Stable markets elsewhere

Although Melbourne saw a net increase in effective rents during the first quarter, rents remained steady during the second quarter due to tapered enquiries.

Prime net effective rents remained at $410, signaling a 7.7% year-on-year rise.

Incentives were also unchanged during the quarter, following increased enquiries earlier in the year.

Medibank leasing 17,500 sqm in the Melbourne Quarter Tower and Court Services Australia leasing 12,243 sqm in 181 William represented two notable transactions.

Perth’s prime rents were largely unchanged during the June quarter.

Prime rent effective rents averaged $310 sqm in the CBD, with the average rent incentive being 50%.

Although rents have seen little change, the market has seen the highest level of demand and 12-month absorption of the nation in 2021 and early 2022. This is expected to slow, with steady growth forecast for the rest of the year.

“Around the country we are seeing CBD office rents remain steady or grow despite the impact of economic uncertainty on business decision making,” said John Sears, Cushman & Wakefield’s National Head of Research.

“We saw more movement in locations like Brisbane, and Sydney and Perth to a lesser extent, where the return to the office is arguable more advanced.”

“Brisbane experienced the biggest quarterly movement, growing after a sustained period of unchanged rental growth. This reflects continued demand both in CBD and fringe markets, and the longer-term outlook remains positive.”

John Sears, Cushman & Wakefield

Tim Molchanoff, Cushman & Wakefield’s Head of Office Leasing, Australia and New Zealand, added that one of the significant trends that have continued over the first half of the year is the fight to attain quality tenants.

“Sydney is a great example, where rents in higher grade buildings are experiencing a modest uplift whereas the rest of the market has remained stable,” he said.

“With occupancy still subdued in most CBDs we view the ongoing stability of rents as a positive factor.

“We know that employers are looking for high quality space that can help attract and retain people, which continues to be high on their agenda as more people return to offices.”

Tim Molchanoff, Cushman & Wakefield

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