As we get into 2024, the commercial investment market shows signs of rejuvenation, and Brisbane is leading the charge.
Brisbane's office market has outshone other Australian cities, boasting one of the lowest CBD vacancy rates in the country. According to recent data from the Property Council of Australia, the vacancy rate in Brisbane's CBD remained almost stable over the six months to January 2024, inching up only slightly from 11.6% to 11.7%.
While national CBD vacancy rates have increased, the fringe vacancy rate bucked the trend by dropping from 14.9% to 13.9%. The Fringe also recorded the highest annual net absorption across all Australian office markets, with over 45,000m2. The CBD followed suit, ranking third in the country with over 16,000m2.
Analysts predict Brisbane's CBD office market vacancy rate to dip below 10% by mid-2024. Although it may witness a slight rise due to new supply in 2025, it's expected to fall back below 10% during 2026 and 2027.
The limited supply of new office developments in Brisbane, due to high construction costs and lack of builder availability, coupled with broadening tenant demand across industries, is anticipated to curb any significant increase in vacancy. These strong leasing fundamentals primarily drive investor interest in Brisbane's office assets. Solid occupancy and growing rents are boosting investors' confidence in the market.
During 2023, effective rentals in the Brisbane CBD grew by 10%, as incentives slowly retracted and face rents began an upward swing. This positive trend is predicted to continue into 2024, fostering a recovery in the commercial property market. However, leasing fundamentals are not the only aspect attracting investors to Brisbane office assets.
The city is also benefiting from Queensland's population growth. The state recorded the highest net interstate migration in the country, adding 32,255 people over the previous 12 months, as per the latest ABS figures. As Queensland’s capital, Brisbane stands to benefit from this population growth, with increased demand for services and job growth expected to continue driving demand from occupiers.