A Brisbane equivalent to postcode 3000?February 27, 2014 / By
Brisbane is currently in a position to capitalise on the market conditions and fundamentally change its CBD. With apartment sales expected to increase dramatically over 2014, the inner city population projected to record strong growth over the next decade and much of the office stock becoming obsolete, the city has the opportunity to create something akin to the transformation that occurred in Melbourne in the 1990s.
Postcode 3000 was a planning policy introduced in Melbourne in 1992 to transform what was described as an empty useless city centre to being voted as the world’s most liveable city by The Economist for the third consecutive year in 2013, drawing 10,000 residential dwellings into the CBD partly by converting obsolete lower grade office buildings into residential developments. In the 8 years between 1992 and 2000, Jones Lang LaSalle tracked 500,000 sqm of withdrawals within the Melbourne CBD. The advantages were not only limited to the liveability and night economy of the city, with the removal of secondary stock the office vacancy rate decreased from 25.8% in 1992 to 7.5% in 2000. While this decline cannot entirely be attributed to withdrawals and conversions, clearly a thriving residential CBD population has a positive relationship with its office counterpart.
The market fundamentals of the Brisbane CBD office market are weak. The overall office vacancy rate has reached 15.5% and B grade stock at 19.9% in the fourth quarter of 2013. Both of these figures are the highest they have been since Jones Lang LaSalle began tracking the market. Looking forward, the picture does not show significant improvement with the forecast average vacancy to 2022 at 10.7% compared to the 20 year historical average of 7.9%. At present, 37% of Brisbane CBD stock is over 30 years old, leading towards a high proportion of the market reaching functional obsolescence. This stock will need to compete with the 188,000 sqm that is expected to enter the market by 2016, pushing vacancy above the cyclical average.
One major difference between Melbourne’s problems of the 1990s and Brisbane’s redundant stock today is the type of stock. Much of Melbourne’s stock converted was older character buildings. Most of Brisbane’s older buildings were built in the 1970s and 80s, lacking the character of early twentieth century stock. Nevertheless, there are number of aspects of Postcode 3000 initiative that could be beneficial in a Brisbane 2014 context. The initiative included financial incentives as well as technical support for developers, street scaping and promotional support, while the City of Melbourne was innovative in structuring deals with developers that helped minimise immediate development risk of conversions.
If Brisbane truly aspires to become Australia’s new world city, perhaps a policy akin to Melbourne’s Postcode 3000 could transform the CBD into the cosmopolitan capital city it aims to be. Residential apartment sales are expected to increase over 2014, and according to Brisbane City Council’s Population Projections to 2031, most of the population growth is expected to be accommodated by infill and redevelopment. These tentative steps towards a renaissance of the Brisbane CBD stock have the potential to transform the under-utilised CBD into a vibrant and enticing place to live and work.
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