7 August 2014 — In response to record high vacancy rates in Brisbane’s CBD, the Property Council of Australia is calling for a coordinated strategy to retrofit poorly performing office buildings into residential apartments, similar to what occurred with Melbourne’s transformational Postcode 3000 policy.
The PCA’s mid-year Office Market Report showed a vacancy rate of 14.7 per cent in Brisbane’s CBD, the highest level since the report began in 1990, executive director of PCAs Queensland branch Kathy Mac Dermott said.
“Market conditions in recent years have conspired to create a serious and potentially long-term challenge for Brisbane’s CBD,” Ms Mac Dermott said.
She said that premium office spaces, which were blue-chip assets being sought by global investors, would continue to appear on Brisbane’s skyline, causing problems for existing offices, in particular lower grade stock.
“We are now experiencing a very high vacancy rate in the secondary office sector as the city begins the transition away from the office accommodation of the past to the office accommodation of the future.
“Vacancy in the B grade segment has tipped over 20 per cent.”
Ms Mac Dermott said that a continued “flight to quality” would result in the secondary office sector continuing to experience above average vacancy for the foreseeable future, and that the city needed to “rebalance” or risk an investor backlash.
She said industry and government needed to work together to build a coordinated strategy to promote and facilitate the reuse of these buildings, referencing Melbourne’s Postcode 3000 policy from the early 1990s as a proven blueprint.
The policy provided incentives for inner-city living, and saw the conversion of unoccupied lower grade buildings into residential, reducing office vacancy rate. It also spurred development of new residential towers. By 2000, it had led to 3000 new inner-city apartments.