Supply shortage pushes Brisbane office rents up

Office market rents continued to rise in Brisbane during the first quarter of 2023 according to Cushman & Wakefield’s latest quarterly Office Marketbeat; this is in line with the trend observed across most of Australia’s major CBD office markets.

The Office Marketbeat revealed that a shortage of supply and the rapid increase in inflation have led to a rise in gross face rents across all grades of office spaces in Brisbane’s CBD.

Premium gross face rents swelled by 2.1% during Q1 2023, rising from $965 per square metre to $985 per square metre .

This contributed to a 10.2% yearly rise in prime gross effective rents, the most substantial increase among all states

Over the quarter, A-grade gross face rents increased by 3.6% on average to reach $775 per sqm per annum, while B-grade gross face rents increased by 3.9% over the quarter, averaging $660 per square metre per annum.

Gross incentives have remained steady across Brisbane’s CBD during Q1 2023, following an increase in Q3 2022.

Prime gross effective rent & vacancy (6 monthly)

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Source: PCA; Cushman & Wakefield Research

Cushman & Wakefield’s Research Manager, Queensland, Jake McKinnon, says there is a clear trend of growing demand in most CBD locations across Australia.

“Premium buildings and inflationary conditions [are] pushing rents higher.”

Supply pipeline

The Office Marketbeat estimates that there is currently around 90,000 square metres of office space under construction in Brisbane, but no new supply is expected to be added in 2023.

The development at 205 North Quay, spanning across 45,000 square metres, has been completely committed and is currently under construction, with delivery expected in 2024.

360 Queen is expected to be completed in the first half of 2025, and at present, it has around 60% of pre-commitments.

Dexus‘ Waterfront Brisbane development is nearing the start of construction, with completion expected in 2027.

Supply pipeline: new developments & major refurbs

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Source: Cushman & Wakefield Research; PCA

Given the limited supply of office spaces expected to come to market over the next three years, the Office Marketbeat predicts the tightening vacancy will persist, leading to a rise in rents.

Article source: Queensland Property Investor