As mentioned in our article What to expect in office property in 2023-24, sublease space in Brisbane is becoming more sought-after as businesses look at hybrid locations to run their operations. Rather than renting out an entire building, many businesses are leasing smaller spaces, where employees can go on a rotation system.

And it’s proving popular. According to new research, available sublease space in Brisbane is the lowest in Australia at just 0.3%.

Here’s what you need know:

Hybrid work models have gained popularity due to their flexibility. They allow employees to split their time between working from home and in the office, catering to the need for both collaboration and focus. This trend was accelerated by the COVID-19 pandemic, which forced many businesses to adapt to remote work.

Subleasing has become an attractive option, providing businesses with the opportunity to access premium office spaces, often fully fitted and furnished, without the long-term commitment of a traditional lease.

It also helps companies that are looking to downsize, as they can sublet surplus space to other businesses. This generates additional revenue and contributes to a vibrant, collaborative office environment.

For businesses on the other side of the transaction, subleasing can provide access to prime locations and facilities that might have been previously unaffordable or unavailable.

How is this impacting commercial real estate?

Landlords and property managers are having to adapt to these changes, offering more flexible leasing arrangements and reimagining their spaces to cater to hybrid working needs.

It also presents opportunities for those who are willing to innovate. For example, buildings that support the needs of hybrid workers, such as providing shared meeting spaces, advanced technology infrastructure, and wellness-focused amenities, are in high demand.

The trend towards hybrid work is showing no signs of slowing down, suggesting that the demand for subleasing will continue to grow. As businesses continue to navigate the post-pandemic landscape, flexibility and adaptability will be key.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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Recent research has highlighted a substantial surge of interest in industrial property within the Brisbane area during 2022, which has had significant implications for the economy, landlords, and tenants. The demand for industrial space in Brisbane has led to a sharp decrease in vacant spaces, which fell by 14 per cent in the fourth quarter alone and were 65 per cent lower than the peak levels reached in 2021. The vacancy rate is at its lowest point in a decade, underscoring the intensity of demand in this sector.

Record Industrial Space Take-Up

According to the Australian Industrial Review for Q4 2022, Brisbane saw a record 1.1 million square metres of industrial space absorbed throughout the year, the highest take-up across East Coast markets. This impressive uptake has made Brisbane a focal point for industrial property, outpacing even larger markets.

Rental Growth Across Major Cities

The increase in demand for industrial property has led to significant rental growth across Australia’s four major cities. In 2022, Perth saw the highest rental growth at 41 percent, followed by Sydney with 29 percent, Melbourne with 19 percent, and Brisbane with 15.5 percent. Prime net face rents reached $210 per square metre in Sydney, $137 per square metre in Brisbane, $133 per square metre in Perth, and $126 per square metre in Melbourne. This upward trend in rents reflects the strong demand and limited supply of industrial spaces.

South West Brisbane: A Hotspot for Leasing Activity

In Brisbane, the South West region emerged as the most active area for leasing, driven by high demand from industries involved in transportation, postal services, and warehousing. The continued high level of leasing activity in this region throughout the fourth quarter is consistent with the broader trend of shrinking vacancy rates. Interestingly, much of the available industrial space that was taken up consisted of speculative developments that were still under construction, highlighting the eagerness of businesses to secure space even before it is completed.

Supply and Rental Growth Outlook

Despite challenges such as labour shortages, resource constraints, and less favourable weather conditions, the supply of industrial property in Brisbane continued to grow throughout the year. However, the strong demand has led to projections of rental rate increases between five and ten percent in 2023, although this growth is expected to moderate compared to the sharp rises seen in 2022.

Decline in Land Values and Yields

Since the fourth quarter of 2022, land values have decreased by $10 to $20 per square metre, while yields have compressed by 15 to 30 basis points overall. These changes reflect the ongoing adjustments in the market as it responds to fluctuating demand and supply dynamics.

Economic Impact

The surge in industrial property activity in Brisbane has broader economic implications. The heightened demand and increased rental rates contribute to economic growth by attracting investment, creating jobs, and enhancing the logistics and distribution infrastructure. However, rising rents can also increase costs for businesses, potentially leading to higher prices for goods and services, thereby contributing to inflationary pressures.

Impact on Landlords

For landlords, the current market conditions represent an opportunity to capitalise on strong demand and rising rents. Those with existing industrial properties can expect higher returns, while those considering development may find favourable conditions to expand their portfolios. However, landlords must also navigate challenges such as rising construction costs and interest rates, which could affect their investment strategies.

Impact on Tenants

Tenants, particularly those in the logistics, warehousing, and transportation sectors, may face increasing operational costs due to rising rents. This could lead to tighter profit margins and may necessitate strategic decisions about space utilisation and cost management. Some businesses might consider relocating to less expensive areas or investing in more efficient logistics operations to mitigate these costs.

Summary

The Brisbane industrial property market is experiencing a period of significant transformation driven by strong demand, rising rents, and evolving supply dynamics. The impacts of these changes are far-reaching, influencing the broader economy, shaping the strategies of landlords, and challenging tenants to adapt to the new market realities. As the market continues to evolve, stakeholders will need to stay agile to navigate the opportunities and challenges ahead.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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The project represents a new chapter in architectural history for Brisbane. It uses cutting-edge technology and materials to produce a structure that is both aesthetically pleasing and structurally solid. The result? A landmark that will stand tall over the city skyline for decades to come.

When complete, the building will tower above its surroundings and the state-of-the-art construction combines eco-friendly methods with modern engineering to create a structure that can withstand natural disasters as well as aging gracefully over time.

The tower, which has 45,000m2 NLA, is set to be a modern architectural marvel with wellness, sustainability, connection to natural environment at its core. Features include high-end end-of-trip facilities; innovative technology; business hub & wellness centre facilities; optimised natural light with floor to ceiling glass and vibrant outdoor spaces; tiered tropical landscaped terraces; 60 meters Queen Street frontage; retail laneway with food and beverage outlets.

Two major tenants have signed up for space in the $800 million joint venture – accounting and advisory firm BDO and Australian law firm HopgoodGanim Lawyers, signing up for 12-year leases. The businesses will take up over a third of the commercial tower which is located in Brisbane’s much sought after Golden Triangle.

The addition of 360 Queen Street to Brisbane’s skyline will undoubtedly change the face of our vibrant city forever, creating a lasting reminder that Brisbane isn’t afraid to innovate and embrace fresh approaches to architecture.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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The uncertainty around increasing interest rates likely played a part in changes in market conditions during the second half of 2022. Buyer confidence dwindled and attendance at open homes and auctions diminished. And with the tenth consecutive rise in the official cash rate and more rate increases predicted over the coming months, it is assumed we are nearing the peak in this cycle and buyers are pricing in their worst-case scenario and pushing forward with purchasing decisions regardless of what lies ahead.

The Queensland State government’s $7 billion commitment for Brisbane 2032 Olympic and Paralympic Games is set to make a long-term positive impact. The city will become a global destination with increased economic activity resulting in more job opportunities and increased prosperity.

Statistics show that listings across Greater Brisbane are currently down 29% compared to the five-year average, while new listings have decreased 22.4% over the past year – suggesting sellers are not stirred into action by panic or urgency.

On the flip side, some suburbs including Greenbank, Park Ridge and Burpengary East have seen an increase in properties up for sale whereas others such as Thornlands, Eagleby and Calamvale list less available stock than before.

Despite a slight slowing in the rate of price falls across Greater Brisbane, dwelling values continue to retract. Data shows that in February 2023, house prices fell 0.4% after experiencing a 1.4% decline in January. The median value of a house in Greater Brisbane is now $767,781.

The unit market has outperformed the housing one month-on-month with no change in March. Values have increased overall by 15.6% over the last 12 months for units and houses, pushing up gross rental yields.

Meanwhile accurate figures regarding the rental crisis are hard to come by as vacancy rates fluctuate between 0.8% and 1.1%. According to reports, now is an ideal time for investing in Brisbane real estate market, as long-term growth prospects remain strong overall despite pressures on prices and rents.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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I am delighted to share the successful sale of three strata units in a health and wellness centre located at 100-102 Donald Road, Redland Bay. The units were sold for $1.95 million to a Sydney-based investor after being passed in at auction. My colleague Harry Tsigounis and I facilitated the sale on behalf of Kosmos Health.

Our auction campaign generated significant interest, with 58 inquiries from potential buyers. However, we did not reach the desired result at auction. Instead, we entered private negotiations with multiple parties, ultimately securing the best outcome with this buyer.

The property offers a total net lettable area of 504 square metres, with Units 1 and 2 tenanted by Merak GF Cafe. The larger Unit 7 is occupied by Visage Dental & Dermal Studio, Physio on Bayside, and BFS Australia Gym. The tenancy mix ensures a steady income stream, with a weighted average lease expiry (WALE) of just under three years.

The property was sold with a yield of 6.15 percent, reflecting its appeal as a solid investment in a growing area.

• Gross Income: $162,984.35 per annum
• Net Lettable Area: 504 square metres across three strata lots
• Tenants: Four tenants
• WALE: 2.915 years (as of June 2022)

Investment Features:

• Fully tenanted health and wellness centre with strong income stream.
• Flexibility to purchase as a single investment or split into two opportunities.

Commercial property is a popular investment thanks to the historically higher rental returns, longer leases, and lower expenses than residential property, however, there’s no doubt the Australian market has been shaken by rising inflation, interest rate hikes, and recession fears. Still, the outlook is good. If you’ve decided to invest, here’s what you need to know.

Office

The COVID-19 pandemic has brought about huge changes in the office space realm, with many businesses finding that operational functions can be maintained with employees working from home, leading to a dramatic increase in office vacancies. While some employees have returned to the office, a large number are still opting for remote work 2-3 days a week – this is further evidenced by data from a survey of over 630,000 workers across Australia which found that just 7% of employers expected their staff to be present in the workplace for five days a week. Properties with the following features are most popular:

• Close to restaurants and retail.
• Near transportation or plenty of staff parking.
• Surrounded with natural light.
• Well-maintained (saving maintenance expenses)

Retail

COVID-19 had a hefty effect on the retail sector, with stringent lockdowns keeping physical stores closed for months which resulted in many businesses having to close their doors for good. This period pushed consumers to shop more often online but since then, the market has seen a resurgence. Retail sales have dramatically increased this year, with spending reaching record highs according to the Australian Bureau of Statistics. However, it is uncertain whether this trend can be sustained as much of the activity can be attributed to the build-up of cash savings when restrictions were preventing people from travelling or dining out. Properties with the following features are most popular:

• Plenty of parking
• Visible from a busy road
• Low vacancy rates
• With excellent anchor tenants
• Affluent location
• In high-growth areas
• Occupied by long-term tenants

Industrial

Industrial and logistics properties have proven to be extremely popular investments in recent years, with demand for warehouses and logistics facilities soaring due to the growth of e-commerce and onshoring. Research has found that Australia has a “chronic shortage” in this area, with its national industrial and logistics vacancy rate reaching a record low of 0.8%. Investing in an industrial property comes with many considerations, such as the quality of road networks connecting tenants to metropolitan areas, ports and cargo docks; the economy; access to necessary infrastructure; and interest rates. Properties with the following features are most popular:

• Near food outlets and other amenities
• With an office, kitchen, toilets, and air conditioning
• Includes a heavy-vehicle-accessible loading dock
• No extra fees for water, discharge, and noise
• Enviro friendly
• Flexible layouts
• High ceilings

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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As inflation and cost-of-living concerns impact on the economic outlook, commercial property investors are expected to stay cautious until interest rates peak in 2023. Following a tumultuous year in 2022 in which the Central Bank raised interest rates eight times, the commercial real estate sector concluded on a sluggish note, with transactions stalling and confidence progressively declining.

The Economic Climate

Investor confidence has been shaky in recent months due to economic turbulence, leaving many with diminished cash flow and borrowing power. This, coupled with warnings from the Reserve Bank about rising interest rates and falling consumer confidence, has created concern about rental yields and vacancy rates. However, there are some silver linings to this cloud – wages are growing, unemployment is at an almost 50-year low, and Australia remains a valuable asset for foreign investors.

One report revealed that foreign investment into Australian commercial property nearly doubled last year despite the potential risks associated with future market performance. Although office and retail sectors have been hit in certain locations, it appears as though demand for other asset classes such as warehouses and industrial buildings is on the rise.

Risk Versus Reward

Commercial real estate investments are riskier than other types of investments, however, the potential rewards associated with these risks are substantial. With rising demand from growing companies and industry expansion, there may be large returns on investment due to capital appreciation as well as higher revenue when leasing or subleasing the property.

Increased Demand

In recent years, demand for industrial buildings such as warehouses and factories has increased across multiple industries, including retail, hospitality, and logistics services. Investing can put you ahead of the competition and provide potential buyers more options, allowing you to optimise your profits in the future!

With increased consumer confidence and higher demand overall, 2023 looks like an ideal time for those considering investing in commercial real estate in. Taking advantage of present market conditions could result in larger investment returns in the future, so get in touch with the team at McGees today!

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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The retail property outlook in Australia for 2023 is largely positive, with overall retail spending expected to continue its upward trajectory. In Greater Brisbane, retail property market conditions are particularly strong, and the city is seeing increased investment from retail developers looking to capitalise on growth opportunities.

Retail vacancy rates for Brisbane remain low at around 5%, thanks to the continued demographic growth of the city’s population and increased retail demand. This has driven a surge in new retail projects across Brisbane and an influx of capital from domestic and foreign investors. As such, rental prices for retail properties have been steadily increasing since 2020.

Overall, the retail property outlook for 2023 looks very positive for Brisbane and other major retail hubs across Australia. Cautious optimism seems to be a recurring theme from traders as input costs continue to escalate and the impact of the Central Banks monetary policy beings to take effect on overall consumer sentiment and demand.

Positioning assets and total occupancy cost at sustainable levels will be key to weather any future economic downside.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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According to the recently released Property Council of Australia’s January 2023 Office Market Report, demand for office space in the city centre of Brisbane has shot up to more than four times the historical average. In the six months leading up to January 2023, the number of empty spaces in Brisbane’s central business district (CBD) went from 13.9% to 12.9%. This happened because new businesses kept coming into the market and existing businesses took up more space.

Even though Premium Grade still has the lowest vacancy rate (5.9%), the demand for space in lower grade assets shows that new tenants are moving into the city from their homes or suburban offices and taking up space that was previously empty. Most of the positive demand in the Brisbane CBD came from a rise in companies looking for A and B Grade office space.

Brisbane’s Fringe market also saw a small drop in the number of empty spaces, from 15.4% to 15.3% over the six-month period, with net absorption of 38,664m2 over the past six months.

Leasing activity is expected to remain steady throughout Brisbane’s metropolitan area, and another recently released report states that 2023 is the year for tenants.

Brisbane offers affordable office spaces outside of the CBD that caters to businesses on tighter budgets. Suburbs such as New Farm and South Brisbane have seen significant growth in office leasing activity as they provide lower rentals than inner-city areas while still offering convenient access to amenities and transport links.

Office fitouts are also expected to remain popular over the next few years, with office owners investing in their premises to create a modern and productive workplace for their employees. Business owners in Brisbane are taking advantage of the latest office design trends, such as biophilic office design, which incorporates natural elements into the office environment to provide greater comfort and well-being for staff.

Brisbane’s outlook for office property is positive, with strong demand expected from office tenants throughout 2023 and beyond.

Additionally, office properties in Brisbane are expected to benefit from the city’s expanding infrastructure network and ongoing developments, such as the Cross River Rail project. This will create further economic opportunities for businesses located in office space around Brisbane, making it a lucrative investment choice. With these forecasts, office property investors in Brisbane can look forward to a bright outlook for the upcoming year.

To find out more about office property in Brisbane, contact McGees Brisbane today. They can provide expert advice and guidance to ensure you make the best decisions for office rental or fitouts in 2023.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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Demand for industrial space continues to grow, driven largely by increased interest from investors, coupled with high-value projects such as major infrastructure investments and urban regeneration efforts. This trend is expected to continue for industrial properties located in high-traffic areas due to their proximity to desirable amenities.

Also, the growing importance of e-commerce on storage and last-mile logistics has resulted in an increasing need for warehousing facilities, further contributing to a positive outlook for industrial property in Brisbane by 2023.

In addition, industrial property owners are taking advantage of emerging opportunities created by technological advancements and digital solutions that allow tenants greater efficiency and flexibility within their industrial space. This is expected to further support industrial property owners in the years leading up to 2023 and beyond as businesses look for ways to optimise their industrial spaces.

Quality land fit for purpose and located within proximity to arterials remains scarce, resulting in record prices being paid. As construction prices for new products continue to escalate, if projects are to proceed, rents will surely increase to support project feasibility.

Want to know more? We can help!

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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