2022-05-30-莱坊-Brisbane_CBD_Office_Market_May_2022_10页_6mb

Brisbane CBD Office Market Summary (May 2022)

Core Content Overview

The Brisbane CBD office market has shown resilience and renewed activity in the wake of the pandemic, with a focus on pre-commitments and long-term tenant strategies. Despite challenges such as increased vacancy and lower effective rents compared to pre-pandemic levels, the market is expected to stabilize and grow over the next few years, supported by strong economic recovery, infrastructure development, and investment activity.

Key Market Indicators

Economic Growth

• GDP Recovery: Queensland's GDP growth in 2021 was 5.7%, outperforming the national growth of 4.2%.
• 2022 Forecast: Queensland's GDP growth is expected to moderate to 5.4% against 3.8% nationally.
• RBA Policy: The Reserve Bank of Australia increased the cash rate target by 25bps to 0.35% in May 2022, signaling the unwinding of accommodative monetary policy.

Infrastructure and Development

• Cross River Rail: Completed tunnelling and station construction, with full operation expected in 2025. This project supports the 2032 Olympics bid, with 57% of venues within 5km of the CBD.
• Brisbane Metro: Funded through the City Deal, improving CBD accessibility.
• New Supply: Construction has started on 360 Queen St and 205 North Quay, with completion expected in 2025 and 2027 respectively.
• Pre-commitments: Major pre-commitments by tenants like Deloitte, MinterEllison, and BDO are driving new developments, with the BCC requirement potentially triggering a new building of 40,000–50,000sqm in 2026.

Vacancy and Absorption

• Vacancy Trends: Total vacancy increased slightly to 15.4% in January 2022, with prime vacancy at 16.3% and secondary at 14.2%.
• Net Absorption: Expected to swing positive in 2022, with a forecast of 18,700sqm in H1 2022, the highest in two years. Absorption is expected to remain positive at 13,000–17,000sqm per six-month period through 2027.
• Vacancy Outlook: Vacancy is projected to contract to below 13% by late 2024, with new supply expected to begin in 2024.

Rent Trends

• Prime Rents: Gross face rents increased by 2.1% YoY to $796/sqm, with incentives stabilizing at 41.0%.
• Secondary Rents: Face rents increased by 2.4% YoY to $630/sqm, with incentives peaking at 41.5% and falling by 50bps in Q1 2022.
• Effective Rents: Prime effective rents fell by 1.7% YoY, while secondary effective rents rose by 3.3%, still 4.6% below 2020 levels.

Investment Activity

• Investment Turnover: Reached $1.7 billion in 2021, more than double the 2020 figure. $570 million settled in Q1 2022.
• Major Sales:
  • 12 Creek St complex sold for $420 million (core yield 5.75%).
  • 179 Turbot St sold for $150.9 million (core yield 6.62%).
  • 100 Creek St sold for $184.7 million (core yield 5.52%).
• Buyer Trends: Domestic buyers dominated 2021 transactions, accounting for 73% by value. Offshore investment is expected to increase in 2022.

Tenant Activity

• Leasing Activity: Rebounded to pre-pandemic levels, with a focus on long-term pre-commitments.
• Major Pre-commitments:
  • Services Australia committed to 205 North Quay.
  • Deloitte and MinterEllison secured major lease commitments.
  • The JV between Investa and Charter Hall committed to 360 Queen St, covering 34% of the building.
• Tenant Briefs: Major tenants like BCC, BHP, and Boeing have active requirements for space in 2023–2026.

Market Outlook

• Confidence and Strategy: Greater tenant confidence is driving long-term decisions and pre-commitments.
• Supply and Demand Balance: Net supply is expected to be balanced by net absorption, with vacancy likely to improve in H2 2022.
• Construction and Upgrades: Continued infrastructure and construction activity will support professional and technical employment, and facilitate upgrades of the CBD office stock.

Contact Information

• Research: Jennelle Wilson, +61732468830, Jennelle.Wilson@au.knightfrank.com
• Capital Markets: Justin Bond, +61732468872, Justin.Bond@au.knightfrank.com
• Occupier Services: Matt Martin, +61732648822, Matt.Martin@au.knightfrank.com
• Valuation & Advisory: Peter Zischke, +61731936811, Peter Zischke@qld.knightfrankval.com