Brisbane CBD sprawl to redefine the boundaries of the city and an extra 11 office buildings needed

6 June 2024

Brisbane’s CBD will need to extend from Milton to Fortitude Valley and beyond as well as accommodate the equivalent of an extra 11 structures the size of 1 William Street, the largest building in the CBD, by 2032 if it is to keep up with the projected office space required to accommodate the population boom, an exercise which would redefine Brisbane.

Colliers Queensland research report ‘Into the Golden Decade: Transformation of the Brisbane CBD’ has demonstrated there is a pressing need for significant expansion of office space within Brisbane’s CBD to meet future demands.

By 2032, estimations based on benchmarks from Melbourne and Sydney suggest Brisbane will need between 1.5 million and 1.9 million sqm of new office stock. Over the past decade, Sydney CBD saw nearly 1.3 million sqm of new stock, while Melbourne saw an addition of over 1.4 million sqm to its CBD.

As well as requiring the equivalent of an additional 11 structures the size of 1 William Street, the CBD would need to expand out to fringe areas to accommodate this growth, this could involve expansion into near city areas such as Fortitude Valley, Spring Hill and Bowen Hills, with potential activation of areas like Milton through proposed Olympic projects. Cross River Rail will also activate the areas to the inner north and south.

Colliers Queensland Office Leasing National Director Matt Kearney said as South East Queensland faced huge changes in the face of significant population growth and overseas migration we were going to see the Brisbane CBD office market redefined.

“To accommodate future population growth, we can’t fit into the CBD alone, we will see the CBD amalgamate with near city areas making the CBD a much larger footprint,” Matt Kearney said.

“The Brisbane central business district is poised to face a significant shortage of office space by the time the 2032 Brisbane Olympic and Paralympic Games arrive.

“With 73 per cent of the state’s population residing in SEQ, the significant correlation between population growth and the expanding CBD office sector in Brisbane is clear.

“There is a need for an expansion of office stock to accommodate the rising demand, particularly considering that, unlike other states with satellite cities, Brisbane sees a concentration of its workforce in the CBD.

“With only 205,700 sqm of office stock in the pipeline and a considerable portion, 70 per cent, of this already pre-committed, added with the cost of construction and a severe shortage of labour, we have a situation where the office stock will not meet the projected white-collar population if additional buildings do not enter the market,” Matt Kearney added.

Colliers Queensland Senior Research Manager Pragya Sharma said in the coming years, heightened demand was anticipated, driven by the growth in white-collar employment and increased job opportunities resulting from population expansion.

“Deloitte forecasts show that the professional, scientific and technical services, public administration and safety, as well as financial and insurance services will remain the top employers over the next decade accounting for 84 per cent of the white-collar workforce,” Pragya Sharma said.

“These sectors are also anticipated to be the fastest growing in the CBD, and as these companies expand their workforce, there will be an increasing demand for office space to accommodate this growth.

“Additionally, national financial institutions link ANZ have shown increased interest in boosting the state’s tech sector by establishing a substantial tech hub in Brisbane and relocating a significant portion of their larger staff appointments to Queensland,” Pragya Sharma added.

Colliers Queensland Capital Markets Associate Director Sam Arkell said we were witnessing an increase in the weight of capital viewing Brisbane as a desirable investment destination.

“This is being fuelled by favourable occupier fundamentals that continue to outperform other major Australian markets,” Sam Arkell said.

“Over the last decade, the Brisbane CBD office market has experienced significant capital injections exceeding $16 billion with an additional $10 billion invested in the city fringe.

“The Brisbane CBD office market’s appeal lies in its attractive yields, strong occupier markets with the strongest rental growth seen since the 2000’s and Brisbane’s relative value compared to other eastern seaboard markets, making it an enticing prospect for ongoing investment,” Sam Arkell added.

Colliers Queensland Capital Markets Associate Director Mitch Witherow said considering the current rental rates and the anticipated increases, it was highly likely that more businesses, especially those from the southern states, would take advantage of the opportunity to secure space in Brisbane.

“This is particularly true for larger corporations aiming to expand their presence in the state, given the city’s continuous growth in national significance,” Mitch Witherow said.

“The impending benefits associated with the lead-up to the 2032 Brisbane Olympic and Paralympic Games are likely to further motivate companies to capitalise on this opportunity.”