Brisbane office space continues to attract strong demand

The Brisbane office market continued to experience strong demand in the six months to July 2012, according to the Property Council of Australia’s latest Office Market Report.

While the headline vacancy rate is 7.9 percent, up from 6.2 percent over six months, this can be attributed to supply additions, Queensland Executive Director of the Property Council of Australia, Kathy Mac Dermott, says.

“The completion of the much-awaited 111 Eagle Street contributed to the 82,737 sqm added during the last six months, the highest supply addition seen in Brisbane in three years,” Ms Mac Dermott says.

“Over this period net absorption was 36,916 sqm, more than two and a half times the 20-year average.”

“This healthy ongoing demand for office space will help to offset the 28,159sqm due to come online at the end of 2012, and the further 21,315sqm expected in 2013.”

“The Fringe market also saw an increase in vacancy rates to 8.5 per cent, up from 7.6 per cent. However, unlike the CBD, the increase was due to a weakening in demand rather than supply additions.”

“B Grade was the only Fringe sector to see a decrease in vacancy, with a modest drop from 13.4 percent in January to 12.9 percent in July.”

“A total of 7786sqm was added to the Fringe over the six months to July, with a steady stream set to enter the market over the next 18 months.”

“While the headline vacancy rate has increased over the past six months, Brisbane continues to experience strong demand overall in the office market segment.”

Brisbane CBD, July 2012 Headline comments:

• Brisbane CBD vacancy increased in the 6 months to July 2012
• This came about due to supply additions
• Only the C Grade segment posted a vacancy decrease over the period
• There is a moderate amount of space in the pipeline over the short term
  

Vacancy analysis:

• Brisbane CBD’s vacancy rate increased from 6.2 percent to 7.9 percent
• This was due to supply additions of 82,737 sqm, the highest in 3 years
• Net absorption was 36,916 sqm, more than two and a half times the 20-year average
• 4345 sqm of space was withdrawn over the period
• The C Grade segment was the only one to experience a vacancy decrease over the 6 months to July 2012

Future supply:

• A total of 28,159sqm is due to enter the market in the second half of 2012
• This will be followed by 21,315sqm in 2013
• 148,000sqm is due to come online from 2014 onwards and 139,122sqm of projects are mooted

Key market indicators, Brisbane CBD (aggregate) 

Brisbane Fringe, July 2012 Headline comments:

• The Fringe market’s vacancy increased over the period
• This was due to supply additions and negative demand
• Only the B Grade segment experienced positive demand and a vacancy decrease over the period
• There is a steady stream of space due to come online over the next 18 months

Vacancy analysis:

• Brisbane Fringe’s vacancy increased from 7.6 percent to 8.5 percent
• This was due to 7786 sqm of supply additions and -2851 sqm of net absorption
• 715sqm of space was withdrawn over the period
• In the A Grade segment 5167 sqm of supply additions and -5811 sqm of net absorption caused vacancy to increase from 3.1 percent to 5.1 percent
• B Grade decreased from 13.4 percent to 12.9 percent due to 3382 sqm of net absorption
• C Grade net absorption -422 sqm was the sole reason behind the vacancy increase from 8.8 percent to 9.0 percent
• D Grade vacancy remained at 0.0 percent

Future supply:

• A total of 17,850 sqm is due to enter the market in the second half of 2012
• A further 40,302 sqm is due in 2013
• 12,712 sqm of space is planned to enter the market from 2014 onwards
• 82,228 sqm is mooted for this market

Key market indicators, Brisbane Fringe (aggregate)

For more information:
Kathy Mac Dermott,
Property Council Queensland Executive Director
0427 243 986

For full analysis and coverage, visit the dedicated website: www.officemarketreport.com.au