Brisbane CBD office absorption hits 16,300sqm in Q4

Thanks to large tenant movements from various industries.

In a report, JLL noted that there was positive net absorption in the Brisbane CBD office market, totalling approximately 16,300 sqm and a headline vacancy of 9.8%. 

“Positive demand was driven by large tenant movement from a broad base of industries, and some small tenant expansion,” the report said.

Here’s more from JLL:

Negative net absorption in the Brisbane Near City, totalling -5,200 sqm. Large tenants (>1,000 sqm) are sub-leasing additional space and some have centralised to the CBD. Net absorption remained positive in the Milton sub-precinct, while all others were negative.

No new completions recorded in the Brisbane office market

No new office projects have commenced construction over the quarter. Development activity remains subdued in the Brisbane market, some projects have received planning approval and are actively seeking pre-commitment.

In the Near City, no major office projects are under construction. A small refurbishment (1,620 sqm) at 388 Brunswick Street has reached completion in Q4 2024.

Rental growth remains positive in the CBD with strong increases year-on-year

Prime net effective rents increased 0.2% to an average of AUD 344 per sqm in the Brisbane CBD and 1.8% in the Near City to AUD 236. Average prime incentives were recorded at 39.7% in the CBD and 41.1% in the Near City.

Prime CBD yields have softened 12.5 bps quarter-on-quarter, with a spread of 6.00% to 8.25%, the lower yield softened 25 bps. Prime Near City yields softened 25 bps quarter-on-quarter, with a spread of 6.75% to 8.50%, both upper and lower yields softened 25 bps.

Outlook: A fully pre-committed office tower is on track to complete in 2025

The low supply trend will be ongoing over the near term, as no new developments have started construction. This could provide a benefit to existing assets with the potential to lower vacancy and maintain rental growth.

Investment activity in Brisbane could be subdued in the coming year, given the limited number of office assets currently on market and the elevated cost of debt.