Insights

Q4, FY24/25 

 The end of the financial year wrapped up in a pleasing way for commercial landlords, with vacancy rates holding steady, tenant demand increasing in some areas, and average lease terms extending.

Here's an overview of the market in more detail.

Vacancy & Supply 

Vacancy rates have tightened to the point where we're seeing multiple tenants competing for the same space. There is competition for their tenancy pre-lease expiry, or in some cases, they are being leased underneath them.

According to our data, as of Q4 FY24/25, the vacancy rate sits at 11%, a sharp improvement compared to ~35% during COVID. However, following the back of some large occupiers of space within the Brisbane metro area recently committing to relocate back into the CBD, we can expect around ~40,000 sqm of new supply to hit the market between mid-2026 and mid-2027.

However, despite this supply coming online in the next 24 months, if we use previous PCA absorption rates to project future vacancy, we expect that vacancy rate in the Brisbane fringe could hit as low as 6% before new supply comes online in 2028.

Groups relocating back to the city include:

• Bank of Queensland
• Department of Defence at Skyring Terrace,
• Brisbane City Council at Green Square South, and
• CPB Contractors at HQ South
  
  

Brokerage Market 

When it comes to forecasting both future costs and staffing needs, the average lease term has now increased to five years, which we think reflects improved confidence among tenants.

Stabilised inflation and a more predictable economic environment have contributed to this positivity.

Tenant Demand & Leasing Trends 

We're witnessing a growing interest among tenants in outer suburban precincts, where rents are around $100–$150/sqm cheaper. We believe this is because those locations provide a better value proposition with higher incentives.

Furthermore, with construction and trade costs continuing to rise, many tenants are opting to retain existing fit-outs and reuse older workstations. This allows them to redirect their incentives towards rental abatements, ultimately reducing their overall rental obligations.

Rise in Tenant Representative

 We’ve seen a significant rise in demand for confidential briefs in the market, which we believe is being driven largely by two factors:

1. Late-stage representation: Some tenants are appointing tenant reps at the final negotiation stages to validate figures without upsetting the landlord or agent.
2. Cost justification: Even tenants who intend to remain in their current premises are appointing tenant reps to negotiate their rental costs.

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