Leasing on Fire: Australia's Brisbane Office Market Dominating in 2023

The Brisbane office market has been experiencing a significant surge in leasing activity, solidifying its position as a leading player in the Asia Pacific region.

The Brisbane office market has been experiencing a significant surge in leasing activity, solidifying its position as a leading player in the Asia Pacific region. Recent data from CBRE has showcased Brisbane's remarkable growth in office tenancy, placing it second only to Seoul in terms of expansion over the past year and a half.

According to CBRE's report, the return to physical office spaces combined with a robust economic environment has resulted in a remarkable 5.9% increase in the tenant base within Brisbane's Central Business District (CBD) since the end of 2021. While Seoul takes the top spot with a 6.2% growth rate, Brisbane is closely following suit, outperforming other major cities like Tokyo (+4.7%), Perth (+2.8%), Singapore (+0.6%), and Hong Kong (+0.3%). In stark contrast, both Sydney and Melbourne have experienced a contraction in their tenant bases, with decreases of 0.8% and 1.8% respectively.

CBRE's research highlights Brisbane's strong resurgence in the office sector, noting that occupancy levels on peak days (typically Tuesday to Thursday) are nearly back to pre-COVID levels. Additionally, larger corporations occupying more than 3,000 square meters of space have generally maintained or expanded their footprint when reassessing their office needs.

This positive momentum in Brisbane's office market is further supported by the recently released Property Council of Australia Office Market Report, which identifies Brisbane as the only CBD market in the country to witness a decrease in vacancy rates over the past 18 months. At the end of 2021, Brisbane's overall vacancy rate stood at 15.4%, which has now tightened to 11.6% due to robust net absorption of 116,000 square meters during that period. On the other hand, Sydney and Melbourne have seen their vacancy rates increase by more than 2 percentage points as tenants downsized.

Moving forward, Brisbane is projected to face a sustained supply shortage, as no new office buildings are scheduled for delivery until early 2025. This shortage will ultimately drive the CBD vacancy rate even lower, with CBRE forecasting a base case scenario of 8.5% vacancy rate by the end of 2024. This would mark a significant achievement for the city, as it has not experienced a sub 10% vacancy rate since late 2012.

In conclusion, Brisbane's office market has emerged as a powerhouse in the Asia Pacific region, thriving on a thriving leasing scene and sound economic conditions. The city's strong return to office, coupled with the preference for larger corporations to maintain or expand their office footprints, has undoubtedly contributed to its remarkable growth. Furthermore, the continual tightening of vacancy rates showcases Brisbane's attractiveness to businesses seeking office space. With no new office buildings set to be delivered until 2025, Brisbane's position as a premier office destination is only expected to strengthen. Investors and businesses looking to capitalize on this thriving market should keep a close eye on Brisbane's office sector.