Spec suites increasingly sought after in Brisbane office leasing market

Demand for spec suites in Brisbane is on the rise largely due to increased fitout costs and delays in delivery, with tenants increasingly wanting to avoid having to fit out their leased space themselves.

Knight Frank figures show that while demand has been consistently strong for spec suites, there has been a noticeable rise in demand for fitted stock over the past year.

Over the first half of 2022 90 per cent of tenant briefs had a preference for fitted stock, compared to 80 per cent in the second half of 2021.

Meanwhile in July, 100 per cent of tenant briefs released had a preference for fitted stock, while for Q2 the figure was 94 per cent.

Knight Frank Partner and Head of Office Leasing Mark McCann said occupiers were increasingly looking to lease spec suites or modified existing fitted stock to combat rising build costs and delays in construction.

“The current risk for tenants designing and delivering their own fitout is the uncertainty around the rising build costs and the potential delays to deliver a fitout within their required timeline.

“It is more economic for tenants to secure leases on existing fitted stock and it also de-risks any timing issues to occupy the tenancy.

“The current strong demand for ‘fitted options’ by tenants is causing landlords to accelerate delivery, where possible, of new spec suites or upgrade or refurnish older existing fitted tenancies to cater for the increased in demand.

“Modifying existing fitouts is not only more economic, but recycling existing fitouts also ticks some boxes from a sustainability perspective.”

Knight Frank Office Leasing Analyst Tessa Blaby, who compiled the data, said there was currently circa 40,700sq m of spec suites available throughout the Brisbane CBD, with 59 per cent of spec suites situated in B-grade assets and 29 per cent in A-grade assets.

The largest bracket of suites available are between 101sq m to 200sq m (39 per cent), while 29 per cent is sized between 201sq m and 300sq m.

“Activity in Brisbane’s CBD office leasing market is heating up, with tenant briefs on the rise,” she said.

“Briefs sized between 551 square metres and 1000 square metres are still currently the most active.

“Our data shows tenant briefs of 1,000 square metres and under totalled 1,130sq m in Q1, rising to 5,000 square metres in Q2 and 8,380 square metres in Q3.

“In Q4 there are 5,600 square metres in tenant requirements so far in this size range.”

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