Brisbane CBD office vacancy predicted to fall until mid 2024. Image: Canva
  • No new supply in Brisbane CBD office market until middle of next year
  • New stock and refurbishments to barely keep vacancy rate in double digit territory through to 2027
  • Tenant demand in Brisbane CBD is expected to maintain momentum

Vacancy in Brisbane’s CBD office market is expected to keep falling until mid-2024 due to strong tenant demand and a lack of new supply, according to new research from Knight Frank.

The Brisbane CBD office market has been without new construction since early 2022, and this pause is expected to continue through to late 2024.

Knight Frank Partner and Research and Consulting Queensland, Jennelle Wilson, says with no new supply until late 2024, the vacancy rate has the ability to make a meaningful reduction, as new product would be limited to refurbished space.

She added there are also likely to be withdrawals of smaller buildings for refurbishment or potential redevelopment, with likely candidates including 41 George Street in 2023, and 150 Charlotte Street and 140 Elizabeth Street in the second half of 2024.

“We expect the vacancy rate to dip under 10% for the first time in more than a decade during 2024, and from there the upswing of new supply and refurbished space is expected to keep the vacancy just into double digits through to 2027,” she said.

Brisbane CBD office total vacancy rate

Image: Knight Frank Research, Property Council of Australia.

The report also found an increasing disparity in the vacancy rate across the different grades with premium clearly the tightest at 5.9%, triggering higher rental growth in these assets.

Knight Frank Head of Office Leasing Queensland Mark McCann said best in class assets were seeing the strongest rental growth due to tenant competition.

“Overall tenant confidence and activity in the market has continued to surge with high net absorption in the past year,” he said.

McCann says the changing economic environment could moderate net absorption in Brisbane’s CBD office market this year, but the growth in Brisbane is expected to maintain positive momentum.

“Queensland’s economy is strong and Brisbane is thriving, bolstered by the significant infrastructure investment, inwards migration and 2032 Olympics.

“The extent of the existing infrastructure spend, in addition to the Olympics 2032 capital works program, provides an exciting platform to the Brisbane office market to outperform other states over the next 10 years.”

The continued increase in construction costs is stifling the prospect of new developments in the CBD, providing an opportunity for existing assets to leverage market conditions with capital upgrades to accommodate future demand, according to McCann.

“Amid a strong preference for fitted spaces, landlords are adopting strategies such as refurbishing existing fitouts to offset high construction costs and promote sustainable building practices,” he said.

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