7 Trends Shaping Brisbane’s Commercial Property Market

Brisbane’s commercial property market is experiencing transformative changes as demand shifts, economic conditions fluctuate, and population growth intensifies. This article explores the key trends shaping Brisbane’s commercial landscape and highlights where investors might find the greatest opportunities amidst these evolving market dynamics. Here are the top trends driving Brisbane’s commercial property scene in 2024.

1. Increased Leasing Demand for Quality Spaces

Brisbane’s commercial property market is seeing a growing preference for high-quality, prime-grade office spaces, as companies aim to attract talent by improving the work environment. This demand is driven by firms seeking to improve employee experiences, with approximately 81% of leasing activity within prime-grade spaces across the CBD (Colliers, 2024). This “flight to quality” has put pressure on lower-grade properties, where occupancy and rental growth have remained flat, creating an opportunity for investors to focus on premium-grade assets.

2. Rising Vacancy Rates in Secondary Locations

Despite increased demand for quality office space, secondary locations within Brisbane are experiencing rising vacancy rates. The vacancy rate for secondary spaces in Brisbane’s CBD has recently climbed to around 13%, largely due to companies consolidating into better facilities and economic factors impacting leasing decisions (KPMG, 2024). This trend suggests a potential market shift where investors might look to repurpose or reposition secondary office properties in underperforming areas.

3. Strong Investment from Foreign and Interstate Investors

Investment in Brisbane’s commercial property market has been bolstered by a rise in foreign and interstate interest. With a total commercial investment volume across Australia reaching $27.6 billion in Q2 2024, Brisbane has seen a noticeable influx of capital from Japanese, American, and Hong Kong investors, along with significant interstate interest (Cushman & Wakefield, 2024). This trend is being driven by Brisbane’s affordability relative to Sydney and Melbourne, as well as future prospects related to the 2032 Olympics.

4. Low Vacancy Rates in the Industrial Sector

Brisbane’s industrial and logistics properties have shown resilience, with vacancy rates as low as 2.7% in key industrial hubs, particularly along the Trade Coast and in the South and West submarkets (Cushman & Wakefield, 2024). This constrained supply is driving rents up, and the pace of rental growth has exceeded national averages, making industrial properties attractive for long-term investment.

5. Impact of Population Growth on Office Demand

Queensland’s population growth, bolstered by interstate migration and international arrivals, is affecting commercial property dynamics. The influx is driving up demand for office spaces as businesses expand or relocate to Brisbane to meet a growing consumer base (Cushman & Wakefield, 2024). This trend is expected to contribute positively to office space absorption rates, especially for centrally located and premium office spaces.

6. Changing Cap Rates

Rising interest rates and economic uncertainty have caused capitalisation rates to soften slightly in Brisbane’s commercial sector. Yields for prime assets have adjusted by approximately 15 basis points, while secondary properties experienced a larger increase in cap rates (Colliers, 2024). This shift presents an opportunity for buyers to enter the market at a potentially lower price point, with expectations that cap rates could stabilize as interest rates level off.

7. Flexible Office Spaces

In response to hybrid work models, Brisbane is witnessing a surge in demand for flexible office spaces and co-working facilities. These spaces offer shorter lease terms and adaptable layouts, attracting tenants who seek flexibility amidst uncertain economic conditions (JLL, 2024). Investors and developers are beginning to capitalize on this trend by incorporating flexible spaces into new and existing properties, signalling a potential shift in Brisbane’s office market dynamics.

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