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Brisbane CBD has beaten Sydney and Melbourne for the strongest Q2 growth in prime office assets on the east coast.
Over Q2 2024, prime-grade office rents in the Brisbane CBD rose by 3.6 per cent, bringing the total prime rental growth rate to 8.1 per cent – the fastest growth rate seen in 16 years.
With quarterly prime office rents rising by 2.1 per cent in Sydney and 2.3 per cent in Melbourne, Brisbane was the clear winner among east coast capital cities.
According to Knight Frank chief economist Ben Burston, a cocktail of influences are contributing to Brisbane’s rise.
“Multiple pressures are driving a rapid escalation in Brisbane rents, with the market responding to growing demand, high construction costs and limited availability of premium and upper A grade floorspace,” he stated.
“While the economy has been sluggish and vacancy rates are elevated, businesses continue to seek out higher grade options that will appeal to staff and that align with wider corporate objectives including more stringent ESG requirements.”
Despite the recent growth seen in Brisbane, Burston noted that the city’s office rents still have further to climb, noting that “Brisbane rents remain well below previous peaks and growth looks to have further to run”.
Andrea Roberts, national head of leasing at Knight Frank, stressed that the rise of hybrid working has not hampered demand for prime office assets across east coast CBD markets.
“Occupiers recognise the need to provide workplaces that support high productivity, wellness, technology, collaboration and lifestyle,” she said.
Along with elevated demand, Roberts noted that restricted supply was contributing to the steady rise in prime office rents seen in Brisbane and beyond.
“We are seeing limited new development,” she observed.
“This scarcity of new office buildings will continue for the remainder of the decade due to higher construction and financing costs, and will create improved deal metrics for landlords in the coming years.”
Over the year to come, Roberts predicted that upcoming transport developments would boost demand for CBD rentals in Sydney.
“We anticipate the much-awaited opening of the Sydney Metro in August to be a game changer for ease and accessibility of travel between key office markets in the city fringe and lower north shore, which will support demand in these markets as the core stock is absorbed,” Roberts said.
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