Brisbane Uptown precinct outperforming expectations: Savills
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Key indicators have pointed towards a recent outperformance of expectations for assets located in the Brisbane Uptown precinct. The recent spike in activity has been attributed to trending building upgrades to include shared areas for collaboration and additional building services.
According to Savills Research, proactive landlords have enhanced their respective assets by investing significantly through the refurbishment of ground floor lobbies, construction of speculative fit-outs, café amenity space and end of trip facilities.
Savills Office Leasing Analyst, Hao Chen has identified an uplift in face rents for buildings in this precinct.
“A 5–10% gross face rental growth has been recorded on assets within the Uptown precinct that have undergone capital investment, resulting in a tightening to the overall vacancy factor in the last 12 months,” Mr Chen said.
Savills Research has recorded an 8.1% drop in vacancy for the uptown precinct in the 12 months to May 2019, currently sitting at 11.9%.
“Landlords who invested into their assets in this precinct last year are now reaping the rewards, providing smaller, agile tenants in the market more favourable office accommodation.”
“Building enhancements and upgrades are becoming an expectation, it seems to be what tenants are looking for and are starting to ask about the buildings capital works plans if the building is starting to look tired upon inspection,” Mr Chen said.
These upgrades form part of landlords’ long-term leasing strategies to add value and enhance the tenant experience, incorporating strategies not only to attract tenants but to also retain them following initial lease expiry.
Mr Chen reports that landlords are strategically repositioning their assets in the market to create a highly desirable commercial address, which incorporates modern design elements and market leading architecture.
In addition to many obvious foyer and end-of-trip facility upgrades, environmental factors are also being considered which include the installation of energy efficient lighting to reduce energy usage and water consumption technology.
Daniel Paxton of Savills Office Leasing said that one of the best examples of this trend has been evident with the ISPT upgrades at 100 Creek Street which has resulted in a 25% vacancy reduction.
“Over the past 12 months, ISPT have staged their upgrade processes to not only ensure they capitalise on a premium product offering, but integrate the re-set into the larger marketing and leasing strategy for the building,” Mr Paxton said.
The significant transformation of 100 Creek Street included not only the upgrade of lobby, lifts and end of trip facilities but also the first of its kind digital canvas centrepiece wrapping around the lift core.
Its design inspiration was aimed at reconnecting tenants to the city’s subtropical surrounds. It features double height pivot door technology, with the lobby opening up to seamlessly meet the city streetscape and embrace the Queensland climate.
Since June 2018, more than 3,000sq m has been leased at the newly repositioned address, with a flight to quality trend that is being washed through from the bordering financial precinct.
“100 Creek Street is standing out as a major value proposition for tenants as it offers a sophisticated corporate identity without the Eagle Street price tag,” Mr Paxton said.
Another standout example where refurbishment has been a success is Hines’ enhancements at 348 Edward Street.
With substantial capital invested into building refurbishments and upgrades, enhancements include a new ground floor lobby and foyer to include a café offering, fitted suites, two new chillers and the refurbishment of all lift amenities and on floor bathrooms.
Savills CBD Office Leasing Executive Daniel Byrne said that in the last 12 months 348 Edward Street has seen a 30% vacancy reduction.
“The primary drivers that have contributed to this take up involve landlords offering ‘plug and play’ suites, the right value proposition and an aesthetic refurbishment upgrade,” Mr Byrne said.
The retail café offering is strategically repositioned to be the only tenant in the lobby with dual inside-outside trading ability, which has been an investment decision focused on driving rents.
“They made a decision to be forgoing rental to look after their tenants in terms of giving them better amenity, all contributing to the experience of the destination.
“The lobby is now an extension of the office. Increasingly, building owners are looking for places where employees can work, meet, and relax,” Mr Byrne said.
My Byrne said that since the upgrade, tenants have been increasingly more attracted to the prospect of 348 Edward Street, reflective through increased enquiry and inspections of the building.
These are only two examples of landlords who have led the charge in the refurbishment space and are now being backed by the market with the increasing demand for their new product offerings.
The future looks bright as the market is now in favour of this movement. Brisbane Uptown precinct assets are paving the way for the future, which in turn will continue to improve amenity supply across the board for all Brisbane occupiers.
Savills is a leading global real estate service provider offering the full spectrum of services from strategic advice to managing assets and projects and transacting deals. Hao Chen, Daniel Paxton and Daniel Byrne are members of Savills QLD Office Leasing team. To learn more about Savills, visit savills.com.au.
