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News release

Brisbane

Large occupiers of office space in Brisbane assessing their options well ahead of lease expiries over the next 2-5 years


​BRISBANE, 7 MARCH 2014 – Office market tenants in Brisbane are coming to market now, way ahead of lease expiries from 2015-2018, to secure good deals in the current market conditions where incentives are currently at between 30-40% depending if it is a prime or secondary building.

According to Jones Lang LaSalle’s QLD Head of Tenant Representation, Michael Greene, “Landlords will be prepared to write deals on space much further ahead of lease expiry than is typical, along with underwriting a tenant’s existing lease tail.

“It makes a compelling case for tenants to consider the premise: rethink, restructure or relocate.”

Writing in Jones Lang LaSalle’s Queensland Real Estate Review, Mr Greene said a number of large occupiers of office space in Brisbane, with lease expiries from 2015-2018, are currently putting briefs to the market looking to take advantage of the market conditions.

 “Firms who negotiate now could potentially save between 30-40% depending if it is a prime or secondary building by acting now, while market conditions in Brisbane, and throughout Australia, remain tenant favourable.

 “For the first time since the 1990s we are seeing effective rental deals being offered by some landlords.  This is in contrast with the vast majority of Lessors who continue to support higher face rents with incentives. 

“This is not widespread in the market and will vary by building and building owner, but it does show that there is now choice for tenants who have the preference to outlay their own investment capital to fund a new fit out and as a result having a lower rental commitment over the lease term.

“Brisbane also has to come to terms with the another risk to the market being the increasing age of buildings and the sharply increased vacancy rate in secondary stock as the state government exits its large holdings in this sector of the market.  

“The average of office buildings in the Brisbane CBD is 26 years old.  In Sydney and Melbourne, redundant stock has been converted to alternative uses such as residential, hotels or extensively refurbished.  This hasn’t happened in Brisbane to the same extent.  The question is whether these older buildings will be taken offline to be refurbished or converted to other uses.   To date 80 Albert Street is the only recent example, with plans to convert it to hotel use,” said Mr Greene.