Property Times

Brisbane CBD Offices : Space consolidations drive increasing vacancy - Q4 2013

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The Australian economy continued to track sideways over Q3 2013, with national economic growth in line with previous quarters at 0.6%, while annual growth to date was 2.3%. At the state level, the Queensland economy recorded benign growth of 0.1% in Q3 2013, with annual growth to date of 1.8%. The key drivers of this result were Dwelling Investment falling to its lowest level in the past 10-years, while household spending remained weak.
Brisbane CBD is currently in a supply hiatus, with no new supply expected in 2014. The next wave of new supply is currently under construction, with the first of three major completions expected in late-2015. Development in Brisbane’s fringe market remains comparatively active, with approximately 35,000 sq m currently under construction and due for completion in 2014.

Brisbane CBD recorded its weakest ever 6-month net absorption figure over H1 2013 at -64,069 sq m, due to business consolidations in both the private and public sectors. In contrast, Brisbane’s Fringe market recorded positive net absorption of 19,050 sq m over the same period, due tenant re-locations (such as Laing O’Rourke). Notwithstanding this, tenant demand remained lacklustre in H2 2013, with net absorption in Brisbane’s CBD expected to remain subdued by historical standards.

Increasing vacancy rates and generally weak leasing fundamentals over the quarter have led to a decline in net face rents (Figure 1), though, incentives increased sharply in response to significantly reduced tenant demand.

Investment volume in Queensland recorded its third consecutive year of increase, totalling $3.4bn for 2013. Investment ended the year strongly at $1.1bn in Q4. Looking to 2014, investors will need to carefully review and consider risk-return criteria. High quality assets in CBD and fringe locations are likely to be harder to acquire as strong competition exists for limited available stock, as evidenced by above average market liquidity in 2013.

Source : DTZ (Groupe UGL)

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Mots-clés : DTZ

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