The commercial property market in 2024 looks promising, with a period of transformation and opportunity across Brisbane, Gold Coast, and Sunshine Coast. Here are the top predictions set to shape these regions' commercial office landscapes in the coming year.
Brisbane: Navigating Uncertainty Towards Stability
Brisbane's commercial property market has weathered a turbulent period, facing inflationary pressures and uncertainty around interest rates. This instability has led to softening yields, impacting transactional volumes. However, a shift is anticipated as higher yields create a more favourable entry point for investors, potentially yielding higher returns.
Despite challenges, well-located office assets with strong fundamentals have seen healthy tenant demand and rental growth, particularly in A-grade and B-plus grade spaces. Tenant preferences are leaning towards pre-fitted accommodations to avoid volatile construction costs.
The market's resilience against uncertainty positions it reasonably well compared to other regions. Once economic stability is attained, Brisbane's office market is poised to rebound quickly.
Gold Coast: Riding the Wave of Demand and Limited Supply
The Gold Coast office market has experienced a strong rebound owing to substantial migration and increased business activity. With demand surpassing available floor space, vacancy rates have decreased significantly, fuelling a surge in rental rates and a reduction in incentives.
Limited new developments due to high building costs have added to the supply-demand imbalance. Despite minor supply additions, the market remains under pressure, fostering a preference for renovated, modernised buildings. This scarcity has made office assets more attractive to private investors, albeit still seeking softer yield levels due to increased debt costs.
Recent transactions, while limited, have shown promising trends, with high-profile acquisitions reflecting market resilience.
Sunshine Coast: Sustaining Growth Amidst Limited Supply
The Sunshine Coast's office market stands out with one of the lowest vacancy rates in Australia, driven by strong economic conditions and strong tenant demand. Rental rates have improved, though there has been a slight increase in incentives due to higher absorption rates.
The smaller office market, driven by owner-occupiers, faces limited supply of strata stock, increasing demand for future developments. The completion of key projects like the A1 Building has boosted the market, with further developments anticipated in the Sun Central precinct.
Rising interest rates have softened yields, reshaping investor preferences. Despite this shift, demand for office space remains stable, underlining the region's potential for sustained growth.
In the end, 2024 presents a landscape of opportunities and challenges across the local commercial office markets. While each region faces its unique dynamics, adaptability and strategic investment remain pivotal.