Brisbane has emerged as an Asia Pacific leader in the office leasing stakes, ranking second only to Seoul for growth in the city’s tenancy base during the past 18 months.
CBRE said that a robust return to the office coupled with a solid economic backdrop has led to 5.9 per cent growth in the Brisbane CBD’s tenant base since the end of 2021.
While Seoul led the pack with 6.2 per cent growth, Brisbane’s was a close second, trailed by the likes of Tokyo (4.7 per cent), Perth (2.8 per cent), Singapore (0.6 per cent) and Hong Kong (0.3 per cent).
In contrast, the tenant bases of Sydney and Melbourne contracted over the same period by 0.8 per cent and 1.8 per cent respectively.
“The dominant occupiers in Brisbane are government, resources and engineering companies, which are increasing their workforce and absorbing additional office space to cater for both immediate and long-term growth,” CBRE Queensland director of office leasing Chris Butters said.
“The other major market thematic is the overarching demand for prime grade office accommodation, as active organisations focus on improving their quality of premises and on-floor workplace environments.
“Looking forward to the second half of 2023, we anticipate that Brisbane’s vacancy levels will contract further with no new supply scheduled to enter the market.”
CBRE’s report points to a solid return to office in Brisbane, with occupancy on peak days (typically Tuesday to Thursday) almost at pre-pandemic levels.
As well, larger corporates occupying more than 3000sq m of space have typically kept the same footprint or expanded when reassessing office requirements.
CBRE head of office research Tom Broderick said this was different to markets including Sydney and Melbourne, where physical occupancy has been lower, which has led the major banks and other bigger organisations to contract their footprint.
“Brisbane has also benefitted from government occupiers at a state and federal level being particularly active in 2023’s first half, and typically looked to upgrade their office accommodation, which is causing the prime grade market to tighten,” he said.
CBRE’s research comes after the Property Council of Australia Office Market Report singled out Brisbane as the only CBD market in Australia where vacancy dropped over the past 18 months.
At the end of 2021, total vacancy in Brisbane was 15.4 per cent—this has now tightened to 11.6 per cent after strong net absorption of 116,000sq m over that 18-month period.
Sydney and Melbourne had an increase in vacancy of more than 2 percentage points in that time-period as tenants contracted.
Looking ahead, Brisbane is facing a continued supply gap with no new office buildings being delivered until early 2025.
This will drive the CBD vacancy rate lower, with CBRE’s base case being 8.5 per cent by the end of 2024, giving the city its first sub 10 per cent vacancy rate since late 2012.
“The city’s tightening vacancy is already impacting on prime rents, with our data highlighting 5.0 per cent gross face rental growth over the past 12 months,” Broderick said.
“This trend is likely to continue as large contiguous space in the market is absorbed and vacancy tightens further.”
