The Brisbane Fringe office market has been expanding faster than any other CBD or Fringe market in Australia. In the past five years, total stock increased 41%, reaching 1.2 million square metres. To put this in context, Brisbane CBD stock increased by 24% in the same period (2.1 million square metres), while the Fringe markets of Sydney and Melbourne each recorded growth of 13% (0.9 million square metres and 1.6 million square metres respectively).
The development potential looked attractive in 2006-07. Low vacancy, rising rents and yield compression all supported developer feasibility models. And while most markets experienced some upturn in construction activity, the Brisbane Fringe market grew at a faster rate than all other major office markets, and continues to do so.
A number of factors are contributing to the on-going attractiveness of Brisbane Fringe for occupiers. Specifically:
Locality: Unlike the majority of precincts within the Sydney and Melbourne Fringe markets, the Brisbane Fringe market precincts are relatively close to the CBD, with the majority being within walking distance. Most Fringe precincts can potentially act as natural extensions of the CBD, particularly Fortitude Valley and Spring Hill.
Rent: Average prime effective rents are AUD 355 per sqm p.a., which is 35% lower than rents in the CBD. Affordable space (rent and outgoings) and close proximity to the CBD means that Fringe occupiers can easily access CBD amenities without incurring the costs of CBD rents.
Stock: Newer stock in Brisbane Fringe can easily accommodate changing tenant requirements, such as environmentally sustainable buildings with large floor plates. Occupiers such as engineering firms prefer to work in a collaborative team, which is supported by large efficient floor plates with a side-core configuration. Also, projects targeting specific market briefs will generally be more practical and financially viable in a Fringe location.
Resources Boom: The investment phase of the resources boom increased development and office take-up activity. This was particularly evident in Queensland and Western Australia. The Fringe market was a clear beneficiary of this solid period of investment, with many occupiers in, or related to, the mining sector taking space.
Policy: Through planning and regulation, Brisbane City Council’s Urban Renewal Brisbane Program has encouraged the development of Brisbane Fringe precincts into a business, retail, and entertainment centre. This is particularly true of Fortitude Valley, which in recent years has benefited from significant commercial/residential development and urban renewal.
Transport: Brisbane Fringe is serviced by a wide range of public transport options. Access has also been facilitated by the completion of major infrastructure projects, including the Airport Link, the Clem7 tunnel and the Fortitude Valley station upgrade. Ongoing infrastructure projects include Newstead River Park, an AUD 1 billion project and the Northern Busway (AUD 2.6 billion).
These factors have propelled Brisbane Fringe into position as the fastest growing Australian office market. With seven projects currently under construction (59,000 sqm), and another 15 projects approved (209,000 sqm), the future supply potential is evident, although take-up will need to match supply in order to further raise the profile of Brisbane Fringe.
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