Queensland holds the key to office investment

While much of the rhetoric on the slow return to office continues to ring true for markets like Sydney and Melbourne, the position is much better in Queensland.

For a variety of reasons, Brisbane never suffered the way our other city markets did when it came to office mass exodus. Confidence is rising as companies continue to commit to bringing people back together in a dedicated work and collaboration space, and leasing activity is buoyant.

Sure, companies are adapting to flexible staff schedules, thanks to the pandemic – and with good reason – but employers are desperate to get people back into the office, and employees are recognising the sheer value of having a physical office to go to.

Take CBA CEO Matt Comyn as a prime example, who in May announced to the bank’s 49,000 staff that they had to be back in the office for at least half of their working time.

Brisbane’s bounce-back

When it comes to office market performance nationwide, Brisbane bounced back extremely well, as stated in the Property Council of Australia’s 2023 Office Market Report. It recorded the highest net demand for office space by far, with a positive demand for space of more than 40,000 square metres.

For context, the only other capital city to see positive demand was Darwin with requirements of just under 10,000 square metres. All other capital cities recorded demand levels lower than their historical average.

Vacancy rates in Brisbane are also continuing to decline, and according to Knight Frank will keep falling until mid-2024. Secondary stock recorded higher vacancy over prime stock in all capital cities with the exception of Brisbane CBD, which again tells us the strength of the city’s office market.

Quanta’s experience with the leasing campaign at 157 Ann Street, Brisbane, supports this view. Quanta purchased this CBD asset nine months ago (October 2022) with 52 per cent vacancy. Today, we’re fully leased at above budgeted rents and below forecasted incentives. This is mainly attributable to two things: a very active tenant market, paired with a great building.

Office brings opportunity … with the right partner

More broadly throughout Queensland, investment in healthcare infrastructure will present new opportunities – as will Brisbane 2032 – by stimulating business health and job creation.

In Ipswich for example, healthcare is the largest employer in the region with more growth expected, bringing confidence and opportunity to tenancy rates across private GP clinics, essential services, government departments and more.

Yes, there are some media headlines painting the office market in a negative light, but it’s important to remember the facts and that all markets respond differently. There are plenty of investors sitting on their hands at the moment, which is why it’s actually the right time in the cycle.

If you’re looking for an investment opportunity, our view is that office is at the bottom of the pricing cycle and will produce strong distributions if you can nail the three criticals: the right location, the right timing and the right value creation strategy.

Above all else, ensure your investment partner is well-positioned to capitalise on cyclical and income growth, and isn’t afraid to roll up their sleeves to get the job done.

That’s what separates the great investment partners from the average ones – a solid value creation strategy to actively maximise each property’s value and investing in the right market to deliver results and reap those worthy rewards.