THE Brisbane CBD and Gold Coast office markets are struggling with vacancies rising substantially.
According to the Property Council of Australia’s July 2009 Office Market Report, the Brisbane CBD and Fringe office markets reached their highest vacancy levels since January 2004 – to 10.7% from 4.2% and 11.6% from 3.2% respectively.
Property Council Queensland executive director Steve Greenwood said the Brisbane office market had continued to grow with record levels of new space coming on-line, with 144,324 sqm in the CBD and 36,428 sqm in the fringe market.
But he added demand has just not kept up to supply.
“The Brisbane CBD, however, has reversed the negative demand trend of the previous period, and posted net absorption of 3103 sqm in the six months to July 2009.
“A further 88,414 sqm is due to come on-line in Brisbane’s CBD market in the remaining half of the year, and 75% of this is pre-committed. Absorbing this uncommitted stock, plus the back-fill that moving tenants create, will be a challenge for the market,” he added.
Greenwood said Brisbane’s Fringe market faces an even steeper hurdle. Of the 39,352 sqm of new stock due to be completed in the second half of the year, only 47% is pre-committed.
“While there are still commercial development opportunities in the Brisbane region, the future development pipeline of office space is contracting. We may see a renewed focus towards development in other asset classes, such as residential, until the market has had the opportunity to absorb some of the high quality space being delivered at present,” he said.
Meanwhile the Gold Coast office market vacancy increased from 18.0% to 20.1% in the six months to July 2009, due to the addition of nearly 13,000 sqm of new stock. The increase, however, is much smaller than the previous six month period, which saw the office vacancy rate climb dramatically from 8.1% in July 2008 to 18.0% in January this year.
Greenwood said the Gold Coast’s office submarkets performed differently over the period.
“What we see from the figures is a dispersal of business movement between the Gold Coast’s main commercial centres – namely Bundall, Surfers Paradise and Robina – and to a smaller extent Broadbeach,” Greenwood said.
“Robina has been the clear performer in terms of recovery on the Coast, with a decreasing vacancy rate and higher demand than supply during the period.
“Southport also has healthy demand, but delivered a higher level of stock during the past six months,” he added.
Greenwood said whilst the Gold Coast’s office market is currently unstable, a slow-down in the rate of new supply offers hope that vacancies will stabilise over the medium term, and decrease in the long term.
Australian Property Journal
