Insights
May 2024

Brisbane Office Leasing Market Update: A Strong Start to 2024

May 2024

As we settle into 2024, the Brisbane office leasing market is showing promising signs of recovery and growth. Anticipated trends are materializing, affirming our predictions and offering insights into the evolving landscape of commercial real estate in the city. Here's a comprehensive overview of the key developments shaping the market:

  • Rising Face Rents and Decreasing Vacancies.

Face rents are on the rise across all precincts, accompanied by a contraction in vacancy rates and applicable incentives. With only 10 tenancies on the market exceeding 3,000sqm+, there's a strong indication that gross face and effective rents will continue to ascend throughout the year.

  • Government Activity and the Election Impact.

The State Government remains actively engaged in negotiations, particularly in the lead-up to the planned election in October. However, we anticipate a slowdown in activity from July onwards, as the existing Government enters caretaker mode pending the election outcome.

  • Shift Towards Outer Suburban and Metropolitan Areas.

Enquiry for outer suburban or metropolitan vacancies is on the rise, driven by the expanding price delta between inner and outer locations. As vacancy within the inner fringe continues to decline, tenants are increasingly seeking more affordable office accommodation in non-traditional precincts.

  • Resurgence of the Education Industry.

The education sector is witnessing a resurgence in post-COVID lows, fuelled by increasing foreign student numbers. Projections suggest this trend will continue well into 2025, providing a positive outlook for the market.

  • Brisbane: The Best Performing Office Leasing Market.

Brisbane has emerged as the best-performing major city in the office leasing market, with the Brisbane fringe leading the charge as the top sub-market nationwide. Vacancy rates hover just over 10% and are expected to dip into single digits by year-end.

  • Demand Surge for A & B+ Grade Office Buildings.

There's a notable surge in demand for A & B+ grade office buildings, resulting in a significant uptick in rents, with some precincts witnessing an increase of approximately 10% since Christmas 2023.

  • Urban Renewal Driving Growth.

The Urban Renewal market, encompassing areas like Fortitude Valley, Bowen Hills, and Newstead, has experienced solid performance over the past six months, spearheading activity across inner fringe locations.

  • Suburban Precincts on the Rise.

Suburban precincts such as Hamilton, Murarrie, Cannon Hill, and Eight Mile Plains are also witnessing strong performance, driven by a prominent flight-to-quality trend.

  • Scarce Fitted Stock and Early Tenant Engagement.

Fitted stock remains scarce across all size brackets, both due to high demand and the rising cost of fit-outs, which have surged up to 40% since pre-COVID times. Consequently, tenants are initiating discussions about potential relocations much earlier, with larger organizations making moves almost 18 months in advance of lease expiry.

In conclusion, the Brisbane office leasing market is off to a strong start in 2024, characterized by rising rents, decreasing vacancies, and notable shifts in tenant preferences and government activity. While challenges remain, the overall outlook is optimistic, signaling continued growth and resilience in the face of evolving market dynamics.

Speak with the experts at Aegis Property Group to find out the best lease arrangement for your business.
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