Brisbane CBD prime net effective office rents up 5.1% in Q2

And PNER in the Near City grew 2.0%.

Prime net effective rents increased by 5.1% in the CBD and 2.0% in the Near City over the quarter, according to JLL. Strong growth in prime rents as a well as a minor decrease in incentives (from elevated levels) were the key drivers of this growth.

JLL added that prime yields in the CBD softened by 13 basis points (bps) over the quarter to range between 5.25%–7.00%, with a midpoint yield of 6.13%. Similarly, Near City yields softened a further 38 bps to range between 6.00%–7.75%, with a midpoint yield of 6.88%. 

Here’s more from JLL:

The Brisbane CBD office market recorded positive 22,800 sqm of net absorption over the quarter. The key factor contributing to this was a government tenant relocating into Midtown Centre (11,900 sqm) from 1 William Street, with this vacant space being backfilled by other government tenants. Small tenants (<1,000 sqm) also supported this positive demand. As a result, vacancy decreased to 12.6%.

The Brisbane Near City office market recorded positive 20,700 sqm of net absorption over the quarter. The main driver of this positive result was small-tenant (1,000 sqm) expanding within the market from the utilities and healthcare sectors. From this, the Near City vacancy rate decreased over the quarter by 2.0 ppts to 14.8%.

We are tracking 177,900 sqm of stock under construction

There were no new office completions recorded in the CBD or the Near City over the quarter. The Near City recorded four withdrawals over the quarter (totalling 7,193 sqm), resulting in total stock decreasing 0.6% to 1.38 million sqm. 

We are currently tracking about 201,100 sqm of supply under construction across five developments in Brisbane CBD and Near City. The largest of these projects is Waterfront Brisbane, 3-69 Eagle Street (69,000 sqm), which has a scheduled completion date in early 2028, and is 37% pre-committed as at the end of the quarter.

Outlook: Public and professional sector demand to remain robust

Professional services and Government tenants are anticipated to remain active within the Brisbane office market over the near term. Tenants are expected to continue showing solid interest in higher-quality office stock in Brisbane, driven by the benefits of improved amenities and the ability to attract and retain top talent.

In light of the current uncertain macroeconomic environment, we are projecting a further softening in yields in the CBD and Near City. This trend is attributed to investors remaining increasingly cautious about the assets they look at. Investors are showing favourable interest in office stock with solid sustainability credentials and covenants.

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