[+] Magic Millions: River City’s Office Demands Spiking

Brisbane needs a substantial and rapid increase in office space if business is going to get done in the Queensland capital. In fact, according to Colliers, the River City needs an additional 2 million sq m of office floorspace to come online in less than 10 years. Colliers, in it’s Into the Golden Decade: Transformation of the Brisbane CBD report, suggests Australia’s third most populous city needs about 11 more buildings the size of 1 William St—the 44-storey home of the Queensland government—by 2032 to accommodate the city’s population boom. The research report reveals a “pressing need” for significant expansion of office space within Brisbane ’ s centre to meet future demands. Colliers Queensland national director of office leasing Matt Kearney says Brisbane’s working centre must be redefined. “ To accommodate future population growth we can ’ t fit into the CBD alone, we will see the CBD amalgamate with near city areas making the CBD a much larger footprint,” he says. “ With 73 per cent of the state’s population residing in south-east Queensland, the significant correlation between population growth and the expanding CBD office sector in Brisbane is clear.” An extra 2.2 million will call the region home by 2046, according to state government forecasting, as the population in the region swells to 6 million people. Almost 500,000 people are projected to move into the Brisbane City Council area alone, increasing the local population to 1.721 million. ▲ Brisbane’s 1 William St—the 44-storey home of the Queensland government. According to Colliers, Brisbane ’ s CBD will need to extend from Milton to Fortitude Valley and beyond by 2032 and be able to accommodate between 1.5 million and 1.9 million sq m of new office stock, based on previous growth trajectories in Melbourne and Sydney. And as the Olympic Games approaches, Kearney says Brisbane is racing against the clock. “ The Brisbane CBD is poised to face a significant shortage of office space by the time the 2032 Brisbane Olympic and Paralympic Games arrive,” he says. “ With only 205,700sq m of office stock in the pipeline and a considerable portion—70 per cent—is already pre-committed. “Added with the cost of construction and a severe shortage of labour, we have a situation where the office stock will not meet the projected white-collar population if additional buildings do not enter the market.” Dexus general manager for Queensland and project leasing Matthew Miller says the Colliers’ report is an ambitious snapshot of where Brisbane is heading in the decade to come. “From an office perspective we’re going to see some good growth over that period. Their prediction is 1.5 million to 1.9 million sq m needed, which is a lot given we’ve got around 2.2 million sq m in the CBD now,” he says. “I think we’ll deliver a quantum of that, whether or not we can deliver the whole 1.9 million in that time is probably a difficult ask. “But it’s great to see that with interstate and international migration, along with white-collar employment growth, Brisbane really is on the up from an office perspective.” ▲ A render of the Arkhefield-desinged Waterfront Brisbane precinct. Dexus is behind Waterfront Brisbane, a $2.5-billion transformation of the Eagle St Pier that promises to be more than simply an office block, rather, a precinct with employee amenities, open public spaces, retail offerings and a dining hub. The site is to be the Brisbane home of Deloitte, DLA Piper, Allens, Minter Ellison, Gadens and Colliers, all of whom are slated to set up shop in the first of Waterfront’s two towers, scheduled for completion in 2028. Miller says that Brisbane’s maturing office footprint in the capital represents a broad business pool that will work in the city’s favour. “There’s this perception that we’re a big mining state but ... from an office perspective those companies only make up about 5 per cent of the market,” he says. “What we’re seeing in Brisbane is a much greater diversity across a range of industry groups and that ’ s a really positive sign for the robustness of this market going forward.” While other cities are reporting a glut of empty offices—in January JLL reported the highest national vacancy rate (14.2 per cent) seen since 1995—Brisbane is bucking the trend. In fact, the capital’s prime grade sector had tightened to 9.8 per cent by the beginning of the year, the only capital in single-digit territory. Despite the remote-working phenomenon being blamed for office vacancies across Sydney and Melbourne, Miller says Brisbane’s different pandemic experience led to a different outcome. ▲ Brisbane had a different Covid experience to other cities, says Miller. “We probably weren’t as greatly affected by Covid, therefore the work-from-home phenomenon wasn’t as great. It hasn’t been as big a hurdle for businesses to entice people back into the office. “Across our portfolio we’ve had really good occupancy rates over the last two or three years.” Brisbane-based Marquette Properties managing director Toby Lewis says that, although demand is out there, several barriers were keeping significant investment out of the new office building market. “Although Brisbane City Council is very pro-development, at the state government level the taxing of foreigner investors is going to hold us back badly,” Lewis, who founded the property investment firm, says. “Brisbane’s office market has far less A-grade and premium-grade buildings than Sydney and Melbourne, however, the current leasing trend is ... a flight to quality, [as] people are moving to better buildings. “To move Brisbane forward we need capital from around the world, or around the country, to recognise there’s a dire need for new quality buildings and a real commercial opportunity. Then perhaps we ’ ll see some buildings built.” ▲ Dexus general manager for Queensland and project leasing Matthew Miller, Colliers Queensland national director of office leasing Matt Kearney, and Marquette Properties managing director Toby Lewis. Given that Brisbane’s CBD is about just 40 city blocks, Lewis predicts there is still a significant amount of growth within that relatively small footprint. “Then we still have Milton, Fortitude Valley, South Brisbane, South Bank and other precincts zoned for 20 to 50 storeys but really don’t have that much development going through them. “We’re not going to run out of land or opportunity. We just need capital and risk takers to deliver projects.” Lewis says that the numbers more than stack up for those willing to take the plunge. “It comes down to the data, which is in our favour. According to ANREV (Asian Association for Investors in Non-Listed Real Estate Vehicles), Brisbane is one of the top leasing markets in Asia-Pacific in terms of rental growth and net absorption,” Lewis says. We’ve had three really strong leasing years in a row here in Brisbane, and then consider the growth of the workforce in relation to the Olympics has barely even commenced. “With eight years to go, we expect a huge amount of white and blue collar job growth.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Magic Millions: River City’s Office Demands Spiking

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