Confidence growing in Brisbane CBD office market: Ray White

Confidence growing in Brisbane CBD office market: Ray White
Confidence growing in Brisbane CBD office market: Ray White

There is growing confidence in the Brisbane CBD office market, according to Ray White's latest Between the Lines report.

The report showed that the improved sentiment is being aided by the growth in employment and the rising population helped along by interstate migration.

In their research Ray White showed the vacancy situation had improved, due to both stock withdrawals and strong levels of take-up.

Plus The future saw limited short-term new supply on the horizon and ongoing absorption would ensure the outlook is much brighter than prior years.

Ray White Head of Research Vanessa Rader said, “strata sales volumes for 2018 were down 24.25 per cent on previous years for office stock, representing $21.104M, but a large retail transaction saw the total volume up 77.10 per cent to $54.979M."

“This sale was the ground and mezzanine floor at 108 Albert Street, selling for $32M and represented a yield of 5.50 per cent, this included 1,047sq m and five parking spaces.”

Ms Rader said the total Brisbane CBD office market had enjoyed a reduction in vacancy in the January 2019 office market report.

“Currently recording 13 per cent vacancy (288,999sq m), this is down from 14.7 per cent in July 2018, and 16.2 per cent 12 months ago,” she said.

“While withdrawal of stock has been strong over this past year, absorption of stock has rebounded, keeping vacancies further compressed.

“Considering vacancy by quality grade, highlights the clear flight to quality which has emerged, but also with affordability in mind.

“Increased demand is most notable for A grade stock, currently representing 9.9 per cent, down from 12.8 per cent in January 2018.”

Ray White Commercial Queensland Director - Office Leasing Jason Hines said economic indicators for the Queensland market had shown improvement over the second half of 2018, with further progress forecast during 2019.

“Interstate migration has swung back to Queensland off the back of improved employment options with a greater volume of the population also seeking the affordable lifestyle that's on offer,” Mr Hines said.

“This improved employment has seen office occupation increase slowly, with vacancies now reduced albeit still ahead of their 10-year average rate of 9.6 per cent, which has kept rents steady.”

Mr Hines said strata capital values currently averaged $4,550/sq m, this was slightly down (0.68 per cent) on the 2017 result and despite representing the sixth period of decline, the wide range of values gave confidence that an improvement was imminent.

“Capital value results has seen an increase in the lower range to $3,200/sq m, while the upper range has grown to $7,200/sq m,” he said.

“This highlights the vast quality of stock for Brisbane CBD strata assets and the discount attributed to D grade properties, as well as larger suites.

“Small (sub-100sq m) higher grade stock continues to be sought-after by savvy occupiers looking to secure attractive premises for their own businesses.

“We expect this level of owner occupier interest to increase throughout 2019, particularly if market fundamentals for the Brisbane CBD continue to improve.”

Some examples of Brisbane CBD office deals include:

Tags: 
Brisbane Office

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