Brisbane Office Market Update – Feb 2O23

Market status

• In H2 2022, tenant demand for office space outstripped supply in the Brisbane CBD pushing vacancy rates down 1 percentage point. But with 12.9% vacancy it’s still a tenant’s market.
• Vacancy for premium space in the Brisbane CBD is down to 6% and there’s very limited availability of small premium offices to lease.
• Office vacancy in the Brisbane Fringe remained steady at 15.5%.
• Hybrid work is being embraced “as a given” but employers are wrestling with how to accommodate flexible working while maintaining company culture. The “flight to quality” trend continues with tenants gravitating towards office space in prime locations with modern amenities.

Outlook

• In 2022, TRS helped more of our clients relocate than in any previous year, with many taking the opportunity to upgrade their offices. Quality remains front of mind for companies to entice workers back into the office and attract new talent in a tight labour market.
• To accommodate flexible working, tenants are enquiring about “third spaces” – communal spaces, beyond the tenancy, which workers are free to use e.g. larger meeting rooms, chill out lounges, rooftop gardens, and outdoor balconies.
• Many landlords are providing speculative fit-outs to attract tenants into vacant space. A spec fit-out may be worth considering, as you might not be able to achieve the same standard fit-out with the incentives on offer. But beware of compromising!
• Space is becoming vacant as large corporates right-size and/or take up space in new buildings. So, it’s important to work with an independent tenant representative to make sure you can access space that may not be advertised on the open market.
• Increasingly, sustainability credentials are an important consideration. However, tenants can baulk at the higher rent for more sustainable buildings.
• Around 100,000 sqm of space is predicted to be added in Brisbane over the next 3 years, but 70% is already pre-committed.

Vacancy rates

Brisbane CBD -12.9%

Brisbane Fringe – 15.5%

Source: TRS research.