Commercial Property for Sale & Lease in Brisbane City

A Summary of the Commercial Market in Brisbane

commercial property for sale & lease in Brisbane

Commercial Property for Sale & Lease in Brisbane City

The Brisbane CBD commercial property market had two major projects reach completion during 2016. These commercial property projects, 180 Ann St and 480 Queen St, impacted on Brisbane’s commercial leasing market. The completion of these two projects saw a large increase in the supply of commercial property. Demand didn’t quite reach the level of supply and consequently we saw unprecedented vacancy rates of 16.9% during 2016.

Premium grade commercial property stock in the Brisbane CBD has increased in 2016 and this has put pressure on the older style, B grade commercial properties. The extra stock and resulting vacancy rates are believed to be pressuring the refurbishment or withdrawal of older stock.

It has been proposed that commercial development will reduce in 2017. There are only two projects currently in progress in the Brisbane City commercial property market.

Gross face rents have remained the same over 2016. In contrast, incentives have increased. This, in combination with increased outgoings, has seen a significant reduction in net effective rental rates and overall achievable incomes for Brisbane CBD commercial properties.

Capital values for Brisbane City commercial property did fall during 2016.

Commercial Property for Sale & Lease in the Brisbane City Fringe

Leasing activity around the inner south and Urban Renewal locales was strong throughout 2016. The majority of transactions in December 2016 also took place in these areas. This was due to the high provision of amenity, public transport and proximity to the CBD.

Overall vacancy rates for Brisbane CBD fringe commercial property remained consistent in 2016. Spring Hill and Milton came under pressure as the trend for residential conversion continued. This has resulted in a declining office market in these areas. It’s anticipated that commercial property in the area will continue to be converted to residential in 2017. This would see a further decline in the office market.

The demand for commercial stock with a secure WALE (weighted average lease expiry) and strong tenancy profile in this area is strong but there is very limited stock available. Demand from owner-occupiers or part owner-occupiers for properties sub-$10 million increased significantly over 2016 due to low interest rates, availability of vacant stock and the potential to purchase properties at below replacement cost.

Amenities, proximity and access to Brisbane CBD and public transport links continue to be major drivers for tenants. As a result, it’s anticipated that this will increase the differentiation between the inner south and Urban Renewal locales in comparison to the Spring Hill and Milton markets.

Commercial Property for Sale & Lease in Brisbane Suburbs

Overall, commercial property for sale and lease in Brisbane suburbs has been mostly stagnant throughout 2016. In some suburbs, local agents report very little enquiry. However, the low interest rate environment of 2016 increased buyer demand from owner-occupiers within good locations where interest costs were well under leasing rates. This interest was primarily within the sub-$1 million market, but also extended to properties under $2 million.

So what’s in store for 2017 for Commercial Property for Sale & Lease in Brisbane?

Although Brisbane City’s office vacancy rate is still high, there is hope. During 2017 we may see a change in site values due to supply, and the yields for quality stock should continue to remain robust.

Demand should be strong for Brisbane City and fringe quality blue chip and premium properties. Commentators have reported Asian buyers channeling capital into quality assets, which is encouraging.

The new supply pipeline in Brisbane City will be limited in 2017. Apart from existing additions, there is only one development in the CBD which will be completed around the beginning of 2019. This means that supply should remain at its present level, hopefully helping to reduce the overall vacancy rate.

 

This article has been written with reference to the December report by Herron Todd White. You can access the report here

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Commercial Property for Sale & Lease in Brisbane City