The Brisbane and Perth office markets have withstood the effects of deteriorating business confidence to finish 2019 on a positive note, JLL says.

The property firm has released its 4Q19 statistics on national office markets, showing positive net absorption of 15,200 square metres over 4Q19 and 50,000 sqm over 2019 – the weakest result since 2014. 

The report also indicates that the national CBD office market vacancy rate fell by 0.3 percentage points to 8.3 per cent over 2019. 

At a glance:

• JLL has released its 4Q19 statistics on national office markets, showing positive net absorption of 15,200 square metres over 4Q19 and 50,000 sqm over 2019 – the weakest result since 2014. 
• According to the report, the national CBD office market vacancy rate fell by 0.3 percentage points to 8.3 per cent over 2019.
• The Brisbane and Perth markets have managed to buck the trend, posting net absorption results well above the long-term average.

Despite the downward trend, JLL Head of Research Andrew Ballantyne said it was not all doom and gloom across the state markets.

“Business confidence deteriorated throughout 2019 and this translated into softer net absorption across a number of markets," he said.

"However, the Brisbane CBD and Perth CBD office markets transcended the year relatively unscathed and posted net absorption results well above the long-term average.

“In another sign of confidence in the Brisbane CBD office leasing market, the resource sector is in expansion mode.

"Over the quarter, BHP and the New Hope Group expanded their occupational footprint in the Brisbane CBD."

According to JLL, The Brisbane CBD recorded 28,900 square metres of net absorption in 4Q19 and 44,900 square metres over 2019 – well above the 20-year average of 27,100 square metres.

The headline vacancy rate compressed by 1.5 percentage points to 11.7 per cent in 2019. 

Mr Ballantyne said the next phase of the Brisbane CBD office market recovery should be a moderation in leasing incentives.

"Prime gross effective rents increased by 3.2 per cent over 2019 and we expect effective rental growth to be stronger in 2020 and 2021," he said.

The Perth CBD recorded net absorption of 5,800 sqm in 4Q19 and 28,900 square metres over 2019 – almost double the 20-year average of 14,700 square metres.

Vacancy remains elevated (19.1 per cent), but the spread between prime (13.5 per cent) and secondary (27.8 per cent) continues to widen reflecting stronger occupier demand for prime grade assets.

JLL Australia Head of Leasing – Australia, Tim O’Connor said the Perth CBD prime grade vacancy was now at its lowest level since mid-2015.

"Similar to the Brisbane story, the expansion of resource related firms is having a positive impact on the Perth CBD," he said.

"Dampier Bunbury Natural Gas Pipeline and Mineralogy both expanded their footprint in 4Q19.” 

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