Brisbane office vacancy rates at a 10-year low of 11.7%

There has been strong absorption in the prime office segment.

According to a Colliers report, with Brisbane's office vacancy rates at a decade low of 11.7%, primarily concentrated in a handful of buildings, the market shows strong potential for continued growth. This tightness is particularly evident in premium and A-grade spaces, which have seen strong absorption. 

“Unlike previous cycles, current demand is diversified, driven by a strong flight to quality trend across various industries, including significant absorption by government entities. The lack of new uncommitted supply may lead to further declines in vacancy rates,” the report added.

Here’s more from Colliers:

Brisbane's CBD developments are focusing on collaborative design, green building certifications, agility, and adaptation in response to shifting demographics and a thriving knowledge-based economy. Despite the challenges posed by high construction and borrowing costs, some projects are proceeding as planned, while others face potential delays or re-evaluation. 

Waterfront Brisbane, 205 North Quay, 360 Queen Street, and 101 Albert Street are prime examples of this. These projects have been well positioned to attract tenants in the changing office sector, resulting in high levels of pre-commitment. 

Rents and Incentives

In the current market, tenants face the challenge of fit-out costs exceeding the diminishing incentives offered by landlords. Incentives for A-grade stock have fallen below 40%, while gross face rents continue to rise. 

Premium rents have increased (11%), with A and B-grade rents rising by 7% to 8% over the year with the growth rate moderating, particularly with current macroeconomic conditions slowing lease negotiations. Despite this, A and B-grade rents have again surpassed Melbourne CBD rents by approximately 5%.