Brisbane was the most improved CBD office market over the second half of 2016 with its vacancy rate falling to 15.3 per cent in January from 16.9 per cent, according to the Property Council's latest Office Market Report.
The drop in vacancy rate was due to a combination of rising demand for space from the expanding state government workforce, a big reduction in space available for sub-lease and the withdrawal of buildings for other uses.
Brisbane was the only resource-dependent CBD office market to record a drop in vacancy rate as Darwin matched Perth with a new record high vacancy rate of 22.5 per cent.
While the improvement in the office leasing market will be welcomed by landlords, Brisbane's office vacancy rate is still higher than a year ago (14.9 per cent) and it remains one of the highest across the 24 major office markets included in the Property Council report.
The biggest fall in available space was in the premium CBD office market, where the vacancy rate fell to 12.2 per cent from 21.1 per cent. A-grade vacancies fell to 11.9 per cent from 13.9 per cent. Vacancy rates rates increased to nearly 20 per cent in B and C-grade buildings.
The vacancy rate fell marginally in the Brisbane fringe office market to 12.6 per cent and more sharply on the Sunshine Coast and Gold Coast.
"The Brisbane office market performed well above expectations in 2016, although this was largely due to state government growth [with public sector employment now at record levels] and the impacts of the government's move to 75,000 square metres of space at 1 William Street," said CBRE state director Chris Butters.
"Beyond the government, however, the lower Australian dollar has supported tenant demand from the education and training sector as well as benefiting industries including tourism and agriculture," he said.
Mark McCann, national director office leasing at Colliers International said the new supply pipeline in the Brisbane CBD would be constrained from 2017 to 2019 "ensuring a better balance between demand and supply".
