Commercial Property Outlook 2008 - Queensland

Queensland’s booming resource-driven economy and strong population growth continues to push Brisbane’s office, hotel and industrial markets to new levels. Office rents have been rising by up to 20 per cent and vacancies falling to an all time low of around one per cent and closer to zero for premium stock.

With at least 75 per cent of the new supply due in 2008 already committed, it is likely rents will continue to be under pressure and more businesses will follow the trend of relocating to south east Queensland.

Commercial rents are now about 175 per cent higher, across all grades of buildings, than in 2004 when the upswing in commercial markets began.

Vacancy levels are also tight on the Gold Coast where the market is expected to grow by around 15 per cent in 2008. The Brisbane commercial office market is being bolstered by the construction of the AM 60 Tower at 60 Albert Street.

The $177 million 20 storey project featuring chilled beam air-conditioning can save up to 30 per cent on energy costs and is indicative of the trend towards the construction of sustainable buildings.

In the Queensland hotel market Raptis Group has announced plans for the construction of a Hilton Hotel at Surfers Paradise. The $700 million project will include dual beachside towers with 170 luxury hotel rooms and 340 apartments, with each tower due for completion in 2009 and 2010 respectively.

Whilst the Gold Coast experiences commercial real estate growth, so to are the north Queensland towns of Mackay and Townsville, where MFS has profited from the sale of two hotels for a total of $26.9 million. In the industrial market, there is a forecast of strong activity in key growth corridors adjoining the major arterial routes into and out of Brisbane.

The corridor to Ipswich and surrounding areas will experience growth as the local investment community rallies behind industrial real estate projects focused on defence, logistics and local manufacturing. The strong investor demand and limited available stock is also ensuring a strong performance, particularly in Brisbane’s northside and southside regions as well as the outer south west through Ipswich.