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Its a sleepy little town
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Discussion Starter · #1 ·,5744,12702345%5E25658,00.html

Brisbane a shrinking violet
Fiona Cameron
March 31, 2005
MINING company Rio Tinto is among a handful of big Brisbane CBD tenants looking to shore up future office space needs as the city's leasing market tightens.

Leasing options in Brisbane are fading as rising construction costs keep a lid on the new office tower development, according to industry analysts.

The only prime building with a significant amount of space available, Riparian Plaza, is due for completion mid-year after lengthy construction delays.

Rio Tinto is negotiating to lease more than 5000sqm of space in 215 Adelaide St, according to industry analysts.

Law firm Clayton Utz will vacate the space when it moves into Riparian Plaza later this year.

It is understood Rio Tinto is seeking to establish a shared services centre, separate to an office run elsewhere in the CBD by Rio Tinto Coal.

Jones Lang LaSalle is negotiating the lease, but the agency's commercial leasing director, Mark Curtain, said yesterday no deal had yet been finalised.

In other moves, several large tenants in Waterfront Place, including accountants PricewaterhouseCoopers and law firms Minter Ellison and Mallesons, are among those that have issued accommodation briefs to the market.

BHP Billiton, currently in the Riverside Centre, is also understood to be considering its medium-term accommodation needs of about 8000sqm, and has told leasing agents it will consider CBD and near-CBD locations.

The Brisbane CBD vacancy rate fell to 5 per cent in December, down from 7 per cent last July, according to Property Council of Australia data released last month.

It was the third lowest rate in the country, behind Canberra and Hobart.

Colliers International joint chief executive John Walklate said it was becoming difficult to locate quality space in Brisbane of 2000sqm or more.

He said the leasing market started to strengthen slowly 18 months ago, but had picked up momentum in the past six months.

Access Economics figures showed that in the past five years the Brisbane CBD white collar workforce had grown by 13,000 people, while in the same period the Sydney and Melbourne CBD workforces had not grown at all.

"Over the next four years, Brisbane (CBD workforce) is mooted to grow by another 10,000," Mr Walklate said.

"This would translate into a need for another 150,000sqm of space."

Meanwhile, prime sites that could have allowed new space to be built had been lost to residential development, he said.

They would now never be regained for commercial development because they had been fragmented into strata ownership, he added.

"Developers are having trouble stacking feasibilities, and although rents were growing, there is still a solid gap between where effective gross rents are and where they need to be to justify new construction," he said.

JLL's Mr Curtain said demand for Brisbane office space was coming from the mining and engineering sectors.

The 15 to 20 per cent rental growth seen last year in Brisbane's gross effective rents was not likely this year, but five to 10 per cent could be expected, Mr Curtain said.

Knight Frank associate director of suburban leasing Jason Hines said CBD tenants were beginning to look at fringe locations.

"There had been a similar cycle about 12 years ago, where tenants were prepared to look outside the city.

"Then, it had been rent based, whereas now it is availability based."

Tenants were often missing out on their first option and gazumping had become apparent in the city and the fringe, Mr Hines said.

Rents between $330 and $370/sqm had been achieved in the latest round of fringe city office developments, but the next generation of buildings were likely to see a leap in rents, he said.

Leasing incentives had eased considerably in the past 12 months, he added.

"I think you'll find there will be a lot of removal (of incentives) for existing tenants expanding and for existing tenants wanting to take up their options," Mr Hines said.

"Historically, a lot of building owners have been reluctant to give options, because a lot of tenants haven't traditionally taken them up and when their lease has expired they have gone back out into the market and then renegotiated a lease with their existing landlord.

"I think you will find that as the market tightens up, a lot of these tenants will be forced to take up their options because they have no other choice," Mr Hines said.

Yeah but No!!
1,674 Posts
So this suggests to me that we need more office space in the city, obviously, YAY. Thats fantastic news if a developer is willing to do this. Will the fact that rents are possibly not making construction costs viable for new office buildings make the idea of suburban commercial centres less appealing for developers given that rents in places like indooropilly, Garden City, Springwood, etc are lower?

it's just a ride
341 Posts
sounds like a significant office tower could be on the way. if construction costs were dropped the CBD would prolly explode with office developments.

the article also fails to mention brisbane square. i assume this is because just about the whole thing is precommitted to suncorp and BCC.

3,692 Posts
theres room in Vision but that wont be available for a while. then again, a new office tower will be a while away as well. That cnr Albert, Charlotte St carpark is prime space for a MASSIVE tower. i hope they propose something on the scale like CP1 was in the 80's.

Like whatever....
13,706 Posts
"Over the next four years, Brisbane (CBD workforce) is mooted to grow by another 10,000," Mr Walklate said. "This would translate into a need for another 150,000sqm of space."
Wow - that is equal to 3 fifty story towers, or there abouts. I don't know why the Qld government doesn't just build several very tall towers to satisfy the market place - and to offer incentives for international companies to move here.
Currently Brisbane's office market is so expensive that its more viable to locate in cheaper cities like Melbourne, Adelaide and Perth.
It shouldn't be like that :bash:

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