The Brisbane fringe market includes the major precincts of Milton and Toowong in the west, and Fortitude Valley, Newstead and Bowen Hills and Spring Hill in the north. It also encompasses the suburbs of Greenslopes, West End, South Brisbane, East Brisbane, Kangaroo Point and Woolloongabba in the Inner South. With over 1 million m2 of stock in the fringe region, it is the largest non-CBD property market in the country.
In 2017 and into the first quarter of 2018, Brisbane’s fringe office market struggled. But as we reach the end of the year, things are looking up. Vacancy rates have dropped, motioning a much-needed increase in market activity.
In The City
On a national scale, the CBD office vacancy rate dropped from 9.6% to 9.1% in the first six months of 2018, which is great news for the market. In 2016, vacancy rates were sitting around 11% at EOFY.
Brisbane property investment remains solid with prime stock the popular option for both owner-occupiers and investors thanks to high yields between 5.50% and 6.00%; and attractive net face rents between $635/m2 and $740/m2.
A lack of new additions combined with withdrawals sees Brisbane passing its supply peak, and with just one building completed at the end of 2017, and no new buildings coming to market in 2018, the recently oversupplied pipeline has dried up. Brisbane’s commercial office market continues to face many challenges, like strong demand for office stock and the low supply additions forecast for the next two years.
Also experiencing challenges is the leasing market. With rental incentives expected to remain high the CBD is completely reliant on new business entering the city market. Demand remains very strong for institutional grade commercial investments, but supply is virtually non-existent. This should hopefully lead to the absorption of vacancies throughout the next year.