Brisbane CBD office vacancy rate hits record lows since 2019

The vacancy rate declined to 11.5%, the lowest since Q3 2019.

The Brisbane CBD office market recorded positive 875 sqm of net absorption in Q3 2023. According to a JLL report, prime net absorption was solid (32,900 sqm) whilst secondary net absorption was -32,100 sqm. 

“Demand was broad based, although key industry sectors that contributed to demand were professional services and the public sector. The Brisbane CBD vacancy rate fell to 11.5%, the lowest level since 2019,” the report added.

Here’s more from JLL:

The Near City office market recorded positive 19,600 sqm of net absorption. Demand was driven by larger tenants (>1,000 sqm) expanding within the professional services and healthcare sectors. The Near City vacancy rate increased marginally in the quarter to 15.0%, due to the completion of an asset in Fortitude Valley which was vacant at practical completion.

We are tracking 158,300 sqm of new stock under construction

There were no new office completions recorded in the CBD over the quarter. We recorded one office withdrawal at 41-59 George Street (28,548 sqm). The asset will undergo a full building refurbishment. In the Near City market we recorded the completion of 895 Ann Street, Fortitude Valley, adding 23,222 sqm to the market. The asset had no precommitments secured at practical completion.

We are currently tracking 186,900 sqm of supply under construction in the CBD, across three new projects and one refurbishment. The largest of these projects is Waterfront Brisbane, 3-69 Eagle Street (69,000 sqm), scheduled to complete in early 2028. No projects are currently under construction in the Near City. 

Low levels of investment activity across the market

Prime net effective rents increased by 7.4% in the CBD and 3.6% in the Near City over the quarter. Increased prime rents and a minor decrease in incentives were driving factors in quarterly growth.

Prime yields in the CBD softened by 13 basis points (bps) on the upper end over the quarter to range between 5.38%–7.00%, with a midpoint yield of 6.19%. Near City yields were unchanged in the quarter, ranging from 6.00%–7.75% with a midpoint of 6.88%.

Outlook: Public sector to support demand for remainder of 2023

Government tenants are anticipated to remain active for the remainder of 2023, either through relocation into newer spaces or the expansion of government departments. Professional services tenants are expected to remain interested in high-quality office space, in the vicinity of strong amenities. 

Macroeconomic uncertainty is anticipated to weigh on the yield outlook. Buyers and vendors continue to go through a period of price discovery with this trend being attributed to high cost of debt. Investor interest persists for office stock with strong sustainability credentials.

Note: Brisbane Office refers to Brisbane's CBD office market (all grades).