Government and co-workers drive Brisbane leasing market, according to report

Government, co-workers, and other flexible office space providers, are driving the Inner Brisbane office leasing market, according to independent valuer m3property’s latest report.

The Inner Brisbane Office: September 2019 report also found the continued expansion of flexible office space providers had been a key contributor to the declining vacancy rate over the past 18 months.

It found that while vacancy would increase to circa 13.5% by the end of 2019, on the back of the completion of 300 George Street, it would continue to trend downwards to be circa 11% to 11.5% by the end of 2021.

Report author, m3property’s Director of Research in Brisbane, Casey Robinson, said lease renewals had more than doubled as a proportion of total leases, from 13% in 2017 to 30% in 2019.

"We have seen leasing activity strengthen over the past year and that has been driven by governments, the continued expansion of the co-working and flexible office space sector, and construction and engineering firms involved in major projects, as well as general growth in white collar employing industries," Robinson said.

The report forecast effective rents to continue to nudge upwards over the short-term while incentives, now entrenched in the Brisbane office market, are expected to trend downwards over the medium- to long-term, stabilising around the 25% mark.

Commercial Director at m3property, Michael Coverdale, said weaker business confidence and cost/business efficiencies were also behind a trend to reduce footprints with a number of corporates including Arrow Energy, Shell, Cardno and Insurance Group Australia downsizing at lease renewal.

"The growth in flexible working space options, which is providing organisations with the ability to expand and contract space requirements as required, is another important factor," Mr Coverdale added.

He said there was also evidence to show reducing footprints had driven tenants to seek newer buildings especially those that offered more flexible work spaces.