The commercial market in Brisbane continues to face challenging times however things have been looking up as we move through the final quarter of 2010.
Demand for office space returned in 2010, with Brisbane CBD experiencing the highest rate of demand in Australia. Private investors have continued to remain prominent in the market and foreign investors have made a comeback.
According to the Property Council of Australia, vacancy rates in Brisbane’s CBD have decreased from 11.3% to 10.9% in the six months to July 2010, despite an additional 22,989m2 of stock. Demand was healthy at 27,516m2. B Grade stock in the CBD increased slightly to 15.4%.
The Brisbane fringe area saw an increase in vacancy rates in the six months to July 2010 to 12.2%, up from 11.4% in January 2010. Net supply was 60,898m², more than three times the 15 year average, while absorption levels reached 45,262m². Almost 90% of additional supply expected in the second half of 2010 is pre-committed.
The vacancy rate for Milton increased to 13.9% in July, up from 11.0% in January. Total stock has increased to 233,856m² with net absorption at 7,770m². In the Inner South, total stock as at July 2010 was 259,076 – no change from January 2010. Vacancy is at 7.4%, representing a decrease from 11.6% since January. Net absorption in the six months to July was 10,936m².
The Urban Renewal areas, including Fortitude Valley, saw the vacancy rate increase to 11.6% in the first half of 2010, up from 8.6%. Supply additions were 44,740m², with net absorption at 28,165m².
The CBD remains one of the best performing regions of Australia, while the fringe continues to strengthen as companies move out into areas of higher development activity and lower rents.