Net absorption is positive in Brisbane CBD with the large tenant cohort expanding in Q4 2024

• Positive net absorption in the Brisbane CBD, totalling approximately 16,300 sqm and a headline vacancy of 9.8%. Positive demand was driven by large tenant movement from a broad base of industries, and some small tenant expansion.
• Negative net absorption in the Brisbane Near City, totalling -5,200 sqm. Large tenants (>1,000 sqm) are sub-leasing additional space and some have centralised to the CBD. Net absorption remained positive in the Milton sub-precinct, while all others were negative.

No new completions recorded in the Brisbane office market

• No new office projects have commenced construction over the quarter. Development activity remains subdued in the Brisbane market, some projects have received planning approval and actively seeking pre-commitment.
• In the Near City, no major office projects are under construction. A small refurbishment (1,620 sqm) at 388 Brunswick Street has reached completion in Q4 2024.

Rental growth remains positive in the CBD with strong increases year-on-year

• Prime net effective rents increased 0.2% to an average of AUD 344 per sqm in the Brisbane CBD and 1.8% in the Near City to AUD 236. Average prime incentives were recorded at 39.7% in the CBD and 41.1% in the Near City.
• Prime CBD yields have softened 12.5 bps quarter-on-quarter, with a spread of 6.00% to 8.25%, the lower yield softened 25 bps. Prime Near City yields softened 25 bps quarter-on-quarter, with a spread of 6.75% to 8.50%, both upper and lower yields softened 25 bps.

Outlook: A fully pre-committed office tower is on track to complete in 2025

• The low supply trend will be ongoing over the near term, as no new developments have started construction. This could provide a benefit to existing assets with the potential to lower vacancy and maintain rental growth.
• Investment activity in Brisbane could be subdued in the coming year, given the limited number of office assets currently on market and the elevated cost of debt.