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Brisbane CBD vacancies increase but there's no flight to the suburbs

Business

Brisbane’s CBD office vacancy rate has jumped to 13.6 per cent in the six months to January, much higher than the national average despite a strong health response in Queensland to the pandemic.

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The Property Council of Australia said the results of its Office Market Report showed health restrictions were having an impact but stressed that the Brisbane office market was resilient and increases in the past six months were moderate.

However, the vacancy rates in Sydney and Melbourne were about 8 per cent and the capitals that had been less severely impacted by lockdowns had much higher vacancy rates. Perth has a vacancy rate of 20 per cent and Adelaide 16 per cent.

Brisbane’s net absorption was also the lowest since 2018. The increases in Brisbane vacancies were due to a lack of new demand rather than tenants withdrawing from the market.

Additional supply was expected to be added to the Brisbane office market in 2021 with 44,000 sqm due to be added to Brisbane’s CBD and an additional 45,266 sqm due to come online in Brisbane fringe market this year.

The council’s Queensland executive director Chris Mountford said that more than 80,000 sqm of office space was due to come online in the CBD next year and it would be crucial for the wider economy that the city reverses the current negative trend in demand.

Brisbane’s fringe market vacancy increased from 14.3 per cent to 16.6 per cent and Mountford said that indicated there had not been a flight away from the CBD to outer areas.

“Despite talk of a flight from the CBD in response to COVID-19, non-CBD markets across the country also saw increases in vacancy, indicating that widespread health restrictions across all workplaces and the economic downturn caused by the pandemic were strong prevailing influences, rather than an aversion to CBD offices,’’ he said.

Moutford said the figures showed Queensland’s office market had fared remarkably well during a “tumultuous time’’.

“Clearly the health restrictions and economic downturn caused by COVID-19 had a significant impact on commercial property in 2020, with many workers hesitant to return to their places of work,” he said.

“This is despite the significant lengths that building owners and managers have gone to ensure workplaces are safe and ready to welcome workers back.

“As our office markets adapt to a COVID-normal setting, business and government have a critical role to play in supporting the return to office workplaces and helping more people come back to office precincts.

“Vibrant CBDs are the engines of investment, growth and productivity and must be a focus of the State’s economic recovery.’’

Office vacancies are calculated on whether a lease is in place for office space, not whether the tenant’s employees are occupying the space or working from home.

 

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