Brisbane tenants turn to the Gold Coast

Gold Coast, QLD (September 2007)
The Gold Coast office market is set to benefit from tight market conditions in Brisbane as a growing
number of firms evaluate space options outside the CBD.
In a new MarketView report, CB Richard Ellis said enquiries from Brisbane has been increasing,
particularly from businesses evaluating options for non-essential CBD operations.
‘’The Gold Coast vacancy rate remains close to its historic low at 5 per cent, and conditions are likely to
remain tight until at least the end of 2008 given the strength of enquiry from Brisbane and from new
businesses establishing on the Gold Coast to service the area’s infrastructure programs,’’ CBRE associate
director of research, Craig Godber, said.
‘’With record low vacancy in the Brisbane markets, enquiries from Brisbane have been increasing and
this is likely to continue for the next 12 to 18 months given new supply in Brisbane over this period is
already substantially pre-committed,’’ Mr Godber continued.
The MarketView report said the Gold Coast’s key fundamentals, including economic and population
growth, remained strong and continued to outstrip national indicators.
The Gold Coast City population had broken through the 500,000 barrier, with growth having averaged
3.3 per cent per annum over the past five years. The forecast was for the city’s population to exceed
762,000 by 2026.
In addition, business and consumer confidence remained high.
CBRE’s director, office services, Tania Moore said this would provide positive support for the Gold
Coast’s commercial property sector, even as the market braced for a surge in new office development.
‘’The main office precincts are expected to see around a 20 per cent increase in supply over 2007 and
2008,’’ Ms Moore said.

‘’However, over a third of the additions are strata-title space which is continuing to limit options for
larger tenants,’’ Ms Moore continued.
The current Gold Coast vacancy rate of 5 per cent represents just 18,600 square metres of available
office space. Net absorption over 2006-07 totalled almost 15,000 square metres.
The low vacancy rate and strong tenant demand has underpinned continued increases in rents with
CBRE’s Marketview report indicating that existing prime buildings were achieving net rents of $450 a
square metre to $475 a square metre as at June 30. New buildings were achieving $320 a square
metre to $450 a square metre.
Looking forward, the MarketView report highlights the potential for a future oversupply of office space on
the Gold Coast if all of the proposed new office developments and refurbishment projects are to
proceed.
Almost 28,000 square metres of office space is expected to complete during 2007 and another 50,000
square metres of space is expected to be completed in 2008. While 60 per cent of the new space
coming on line this year is committed, less than 15 per cent of the 2008 supply has been pre-leased to
tenants.
Projects include Southport Central Stage 3 (13,600 square metres), Bermuda Point Stage 3 (6,000
square metres), Emerald Lakes Town Centre (4,100sqm) and Aspect (4,000 square metres). Looking
further ahead, additions in the pipeline include The Rocket in Robina (10,720 square metres), Silver @
The Exchange Stage 2 in Varsity Lakes (8,000 square metres), and Corporate Centre Tower 2 in Bundall
(8,000 square metres).
‘’Any pressures, however, are unlikely until the end of 2008 and options for larger tenants will remain
tight,’’ Mr Moore said.
On the investment front, the MarketView report indicates that demand remains strong both for prime
stock and value-add/refurbishment opportunities amid growing interest from national funds and
institutions.
Major sales (greater than $2 million) totalled almost $250 million in 2006-07 and that momentum is
expected to continue in the next six months.
Subsequent deals such as Trident Corporation’s option to buy the Corporate Centre in Bundall for $106
million, the $23 million sale of the Weinert Portfolio at Varsity to Abacus Property Group and the pre-
purchase of the Aspect office building at Varsity Lakes by The Opus group for almost $20 million had
confirmed the Gold Coast was on the radar of a number of major investment players, said CBRE Gold
Coast managing director Mark Witheriff, who negotiated the sales.
Mr Witheriff said the strong interest from institutions and private investors was maintaining pressure on
investment yields, which were averaging 6 per cent to 6.5 per cent for prime stock and 6.5 per cent to 7
per cent for secondary buildings.

About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), an S&P 500 company headquartered in Los Angeles, is the
world’s largest commercial real estate services firm (in terms of 2006 revenue). With over 24,000
employees, the Company serves real estate owners, investors and occupiers through more than 300
offices worldwide (excluding affiliate and partner offices). CB Richard Ellis offers strategic advice and
execution for property sales and leasing; corporate services; property, facilities and project management;
mortgage loans; appraisal and valuation; development services; investment management; and
research and consulting. In 2007, BusinessWeek named CB Richard Ellis one of the 50 “best in class”
companies across all industries. Please visit our Web site at www.cbre.com

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