Brisbane, 13 April 2012 –
Demand for Brisbane CBD office space shows no signs of slowing, with new research indicating that net absorption will continue at an average of 45,000sqm per annum until 2016.
According to the latest Australian CBD Office MarketView report by CBRE, continued take-up from the resources sector, the public sector and legal/accounting firms will contribute to a long term trend of positive net absorption.
The forecast follows a strong year for Brisbane’s office market, which witnessed nearly 93,000sqm of net absorption despite an increase in total stock, as well as a reduction in the vacancy rate to 6.2%.
CBRE Queensland State Director, Office Services, David Prosser said beyond the completion of 111 Eagle St and 145 Ann St, new supply in the CBD was limited which would continue to put downward pressure on vacancy.
“It is very difficult to secure pre-commitments for large scale projects as the enquiry levels are leveraged towards shorter term project based requirements which is not helpful for developers” Mr Prosser said.
“We suspect many of these project requirements will run for longer than the initial lease terms. This creates a build of pressure for new supply and potentially a very dangerous situation for tenants with lease expirations in 2014 and early 2015.”
While Brisbane’s current vacancy rate is one of the lowest in Australia, it is expected to rise slightly following the completion of these buildings.
“Year-end vacancy is projected at 7.0%, however this is still considerably lower than Sydney at 9.6%,” Mr Prosser added.
According to CBRE’s research, vacancy is then expected to follow a steady downward trend until 2015 when supply is likely to increase.
As at December 2011 prime gross face rents averaged $755sqm with incentives in the order of 20%. CBRE’s report forecasts sustained rental growth pressure is unlikely to return until a firm downward trend in vacancy emerges from the second half of 2012.
Over the 2012 to 2016 period prime gross face rental growth is forecast to average 4.0% per annum with secondary rents forecast to grow by 2.0% per annum.
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