The Brisbane CBD Office market is plagued by limited demand with vacancies currently at 15 per cent and new office developments in the pipeline are likely to cause further blow outs, according to Ray White Commercial.
Ray White Commercial Head of Research, Vanessa Rader, said take up in the Brisbane CBD has been in negative territory for the last two and a half years with the Queensland economy hit by the downturn in the resources and agricultural sectors.
“This reduction in occupied stock has resulted in strong and rapid increases to the total vacancy environment, growing to its current rate of 15.0 per cent,” Ms Rader said in the Between the Lines Brisbane CBD Office Market Update October 2015 report.
“While this reduced from the high of 15.9 per cent in January, 2015, this was due to the withdrawal of stock out of the market. Encouragingly though for the Brisbane CBD is an anticipated uptick in employment which Access Economics forecasts to grow by 2.1 per cent per annum over the next five years.”
Ms Rader said the current size of the Brisbane CBD office market is 2,158,290 sqm, which is the smallest it has been since January, 2012.
But she said this is expected to be impacted by three new developments currently under construction across the CBD and one refurbishment which will enter the market over the next 18 months.
“The remainder of this year will see the Daisho Site at 180 Ann Street completed adding 57,465 qm of uncommitted supply to the market, together with a small 2,800 sqm refurbishment at Riverside Centre,” she said.
“In 2016, we will see the completion of two new buildings which will add 132,708 sqm to the market, of which 80 per cent is pre-commitment which will result in a reshuffle across the CBD and further increases to the vacancy position.”
Ray White Commercial Queensland Director Office Leasing, Jason Hines, said while vacancy has been steadily increasing over the last couple of years, there has been evidence of a flight to premium stock given the significant incentives on offer.
“Premium has the lowest vacancy and is currently 9.3 per cent - down from the 14.2 per cent just 12 months ago, while A Grade stock has been on a stable trajectory upward growing from 4.3 per cent in July, 2012, to 12.3 per cent currently, which now represents over 100,000 sqm of vacant stock.
“B Grade has shown the most rapid increase over the last three years growing from 8.0 per cent in 2012 to a peak of 22.6 per cent before reducing in the first half of 2015 at 19.2 per cent. It is this segment of the market which accounts for the majority of vacant space. The C and D grade markets represent 32,927 sqm and 10,017 sqm respectively of vacant space or 15.0 per cent and 16.5 per cent.”