Brisbane CBD headline office vacancy hits 10.5% in Q3

The city recorded negative demand of -1,346sqm during the quarter.

Negative net absorption was recorded in Brisbane CBD, totalling -1,346 sqm, according to a JLL report. Headline vacancy was 10.5%.

“Negative demand was driven by consolidation in the property and financial services sectors. Prime net absorption was positive 2,200 sqm,” the report added.

Here’s more from JLL:

Positive net absorption recorded in the Brisbane Near City, totalling 3,464 sqm. Large tenants (>1,000 sqm) have taken more space and the small occupier cohort has also contributed to demand. Leasing activity was elevated in South Brisbane and Spring Hill.

The refurbishment of Christie Centre has completed

Christie Centre (19,453 sqm) in the Rail Corridor has been refurbished and floors are available for lease. Three new office developments are under construction in the CBD and on track to complete in 2025, 2026 and 2028.

In the Near City, no major office projects are under construction. Several developments have been placed on hold as construction (totalling 161,300 sqm) delays and rising costs have prevented new office towers from going ahead.

Rent growth continues in Brisbane CBD and Near City; incentives broadly stable

Prime net effective rents per annum increased 3.9% to an average of AUD 242 per sqm in Brisbane CBD and 3.8% in the Near City to AUD 232 per sqm. Average prime incentives were recorded at 39.7% in the CBD and 41.4% in the Near City.

Prime CBD yields held stable with a spread of 6.00% to 8.00%, the midpoint yield has softened 81 bps year-on-year. Prime Near City yields were unchanged over the quarter, with a spread of 6.50% to 8.25%, the midpoint yield softened 50 bps year-on-year.

Outlook: Rent growth likely to stabilise, following strong increases in 2023 and 2024

Occupier movement and demand is likely to moderate in coming quarters, following a strong period of leasing activity. Renewal activity could increase, as rent growth has been pervasive across Brisbane’s office market.

The headline vacancy rate could reduce further in coming quarters. The office supply trend is expected to remain low over the medium term as building new developments remains challenged.