INVESTMENT IN BRISBANE’S OFFICE MARKETSustaining strong office market development is a hallmarkof a high-performing economy, and demonstrates businessand investor confidence in a city’s growth potential. Thelatest data on Brisbane’s office market suggests the cityis attracting record levels of investment, and has a brightfuture ahead, despite lower demand for leasing activity in2012.LEASING ACTIVITYThe latest data from the Property Council of Australiashows Brisbane’s vacancy rates in the last six months(to January 2013) rose to 9.1% and 9.6% for the CBDand fringe areas respectively. This is an increase on theprevious six months with 8% in the CBD and 8.4% inthe fringe. This is due to the significant addition of newstock over the last 12 months, including major CBDdevelopments such as ‘111 Eagle Street’ and ‘145 AnnStreet’, and reduced demand associated with the slowingresource sector, which accounts for 30% of leased space inthe CBD and fringe areas. A similar movement in vacancyrates is also being experienced in Perth. On a positivenote, major business players such as Arrow Energy, BHP,BDO, Hatch and BOQ all pre-committed or movedsizeable operations to new or upgraded developments inthe Brisbane CBD and fringe in 2012.Figure 1: Global Vacancy Rates & Prime YieldsSelected Cities, H2 2012INVESTMENT DEMANDWhile leasing activity slowed over the past 12 months,continued strong development and investment in the Brisbaneoffice market reflects the city’s economic credentials. Over thisperiod, $1.33 billion in commercial property was purchased byinvestors, as shown in Table 1.Table 1: Office Purchases in 2012Brisbane CBD & FringeDomestic & Private Purchases1) 12 Creek St $242 million 1) 215Adelaide St2) 10 Eagle St $195 million 2) 144Montague Rd3) 40 Creek St $85 million 3) 150Charlotte StForeign Purchases$135 million$88 million$71 millionRemainder $428 million Remainder $82 millionTOTAL $950 million TOTAL $376 millionSource: Knight Frank, Australian CBD Office report, Dec 2012Of particular note is the substantial foreign investment intothe city, accounting for almost 30% of office purchases inthe CBD and fringe. Further, Brisbane has had the fastestgrowth in office stock (23.4%) of any Australian CBD overthe past five years.Indeed, Australian cities are becoming hotspots for officemarket investment as investors see potential in our highyield, low vacancy and economically-stable marketsrelative to Europe and the US. As shown in Figure 1, theconditions in Brisbane support a competitive investmentenvironment from a global perspective.18%16%18%16%Prime Yield Rate14%12%10%8%6%4%2%14%12%10%8%6%4%2%Vacancy Rate0%PerthMelbourneSydneyBrisbaneMunichParisBrusselsMilanNew YorkMadridFrankfurtAmsterdam0%Vacancy RatePrime YieldSource: Jones Lang LaSalle; Property Council of Australia
OFFICE DEVELOPMENT IN THE BRISBANE CBD (2009-17)DEFINING THE BRISBANEFRINGE AREAFUTURE OUTLOOKThe future outlook for Brisbane’s office market is strong,reflecting investor confidence in the city’s long-term growthpotential. The graphic above provides a visual representationof the changing face of Brisbane’s office market. With theaddition of these new developments, Brisbane is poisedto accommodate the future demand for office space with130,000 additional jobs to be created in the inner city by2031.As the CBD becomes denser and space more limited, officeinvestment will shift outwards towards the fringe areas. Thisis already evidenced by the substantial development activitytaking place across the fringe area, including the 15 storey‘Wickham 358’ (Fortitude Valley), the mixed-use ‘Gasometer’and ‘McLachlan & Ann’ developments (Fortitude Valley), the16 storey ‘Joule’ (Newstead), and the 15 storey ‘SouthpointTower B’ (South Bank).The Brisbane fringe area includesFortitude Valley, Newstead, BowenHills, South Brisbane, West End,Woolloongabba, Kangaroo Point,East Brisbane, Greenslopes, Milton,Spring Hill and Toowong. The areacurrently has 1.1 million squaremetres of net leasable office spaceavailable.In comparison, the Brisbane CBDhas 2.2 million square metres of netleasable office space available.DAISHO’S ‘180 BRISBANE’DEVELOPMENTJapanese property investor,Daisho, recently commissionedconstruction of their $200 millionoffice development at 174 AnnStreet. The significance of thisdevelopment is that it reached theconstruction phase without tenantpre-commitment, highlightingDaisho’s confidence in Brisbane’sability to generate office demand.
BUSINESS NEWSASIA PACIFIC CITIES SUMMIT LINKSBRISBANE BUSINESSES TO ASIAThe next Asia Pacific Cities Summit will be held inKaohsiung between 9-11 September this year.Under the theme ‘Reshaping the Urbanomics of Cities’,the 2013 Summit will focus on achieving business growth,trade, investment and economic outcomes in the AsiaPacific region.Previous summits have generated significant economicreturns for participating Brisbane businesses. Fromthe 2011 Brisbane summit, over $20 million in tradeagreements and partnerships was generated betweenlocal and Asia-based businesses.For more information on the summit, the businessopportunities available for participants and how to register,visit www.apcsummit.org or contact 133 BNE (263).COUNCIL LAUNCHES DIGITALBRISBANE STRATEGYThe Digital Brisbane strategy, launched by the Lord Mayorin March this year, sets a five-year agenda to kick-start digitaltake-up in Brisbane.The strategy sets forth three core programs aimed atproviding Brisbane businesses with state-of-the-art digitalinformation, encouraging high-potential digital start-upcompanies and improving the experiences of residentsand visitors through digital technology.To download the full strategy, visitwww.digitalbrisbane.com.auBRISBANE-BASED ONIQUA ISA STANDOUT PERFORMEROniqua is a Brisbane-based maintenance, repair andoperations analytics company headquartered in Milton.Established in 1990, the company has grown from a twoperson start-up to become a global exporter with offices inthe US, Chile and South Africa.Specialising in the provision of inventory and assetoptimisation software to the resource sector, Oniqua hasserviced eight of the top ten global mining companies, aswell as oil and gas giants BP, Santos and Conoco Phillips.In 2012, Oniqua was awarded the Australian Exporterof the Year Award by Austrade.MINING SERVICES MANUFACTURERRELOCATES TO BRISBANEIn November last year, Brisbane welcomed Chileanmining services manufacturer Conymet-Duratray to thecity. The company is a world leader in manufacturingdump trays for mining trucks, and has relocated factoryoperations from Victoria to maximise connectivityand minimise costs associated with transportation toQueensland’s major minefields.Conymet-Duratray’s large-scale facility, located inCarole Park, will generate 85 jobs and contribute$50 million annually to the city’s economy. Jobs areexpected to increase when the company relocates itscorporate head office here in 2014.The information in this newsletter provides general information on the Brisbaneeconomy, and is not intended to be relied upon for commercial decisions. While care istaken to ensure accuracy, Council disclaims all liability for any expenses, losses, damagesor costs you might incur as a result of this content being inaccurate or incomplete.For more information, visit www.brisbane.qld.gov.au or email firstname.lastname@example.org.To make a business-related enquiry, call Council’s 24 hour Brisbane Business Hotline on 133 BNE (133 263).Brisbane City Council InformationGPO Box 1434Brisbane Qld 4001N2013-03041© Brisbane City Council 2013For more information visitwww.brisbane.qld.gov.auor call (07) 3403 8888Facebook.com/BrisbaneCityCouncil@brisbanecityqld