We have experienced a better than predicted net absorption of space in the market resulting in the lowest Brisbane CBD vacancy rate since mid-2013. This is due to the strong leasing activity at the top end of town in buildings such as Riverside Centre, 180 Ann Street, 480 Queen Street, Waterfront Place, 259 Queen Street, 310 Ann Street, 275 George Street and 111 Eagle Street.
The 2018 annual net absorption of circa 47,000sqm sits above the long-term average for the past 10 and 20 years. The A-grade submarket has been the best performer in 2018 with vacancies now sub 10 per cent and 12-months net absorption of circa 27,100sqm.
As we closely examine Premium and A grade market segments it is evident that there is a real shortage of good quality contiguous office space available greater than 2,000sqm. Over the next 12 to 24 months, new developments such as 300 George Street, Midtown Centre, 12 Creek Street – The Annex and the remaining vacancy at 80 Ann Street are set to benefit greatly from the improved demand in the office market.
Driving this demand are the public sector, professional services, education, construction, engineering and a resurgence from the mining sector, as well as the great influx from global and Australian ‘co-working’ organisations. For example, We Work’s commitments at 192 Ann Street and 260 Queen Street, and Hub Australia at 200 Adelaide Street. We expect to see further commitments in 2019 from this sector and the vacancy rate to reduce even further.
Whilst the rate is likely to stagnate in early 2020 due to the completion of 300 George Street and 12 Creek Street – The Annexe; beyond this time we may see a gradual improvement in the vacancy rate due to Queensland’s improving economic environment and limited new supply.
It is a similar story in the Brisbane Metro office market with the expectation that the recently completed 25 King Street in Bowen Hills will be fully leased this year. In addition to this, the better quality vacancies in buildings such as Green Square North in Fortitude Valley and 135 Coronation Drive in Milton are now close to being fully leased after successful campaigns in 2018.