Finding value in Brisbane’s red-hot commercial market

Brisbane offices are gearing up for an income-driven recovery with fewer new projects and stronger demand.

$185 billion.

It’s a mind-boggling number, but that’s how much capital is set to flow into Brisbane’s economy over the next six years, driven by a powerful trifecta: booming population growth, supply constraints and the infrastructure build-out ahead of the 2032 Olympics.

“I have never seen Brisbane as a city grow this much and offer so much potential,” says Mike Nguyen, Director of Funds Management at Real Asset Management (RAM).

“This isn’t a 20, 15 or even 10-year story. This is happening over the next five to six years – spanning transportation, precinct upgrades and infrastructure connectivity right across Southeast Queensland.”

While the impact on housing is well understood – with dwelling values up 85% over the past five years – Nguyen argues that Brisbane’s commercial property market offers a very attractive risk-reward proposition, with valuations yet to fully price in the underlying fundamentals.

Rising demand, tightening supply

Nguyen points to three powerful forces underpinning Brisbane’s commercial property story.

First is population and employment growth. Brisbane’s population is expected to boom by 17% by 2032 – the fastest among Australia’s capitals – driving strong white-collar job creation and office demand.

Second is a tightening supply pipeline. While rents are rising and vacancy rates have come down from their highs, they still need to move materially higher for new developments to be viable.

“New office projects require rents well above current market levels to be viable, so a lot of supply is being deferred at this point in time,” he says.

Chart: Brisbane CBD Vacancy Tracker

And third is the Olympics. While often framed as a short-term event, Nguyen says it is better understood as a long-term economic tailwind.

“This will accelerate infrastructure investment and raise the city’s global visibility. So, it is quite rare to see demand accelerating at the same time as supply is being constrained – and that’s what makes Brisbane quite unique,” he says.

The post-COVID reset

Office markets were among the hardest-hit sectors during COVID, with work-from-home policies and uncertainty driving a sharp fall in valuations. But Nguyen argues that reset has created opportunity.

“We’re seeing the commercial office market not only recover, but emerge as one of the strongest sectors in real estate over the next five to seven years,” he says.

The key reason comes back to the looming supply crunch. 

Rising construction costs and labour shortages, exacerbated by Olympic infrastructure projects, are delaying new developments. The result is a sharp “supply cliff” from 2026, when new supply is expected to fall away.

Chart: Brisbane CBD Future Growth in Stock

Historically, when this happens, the market rebalances quickly: vacancy tightens, effective rents rise, and renting incentives provided by landlords fade away, giving them the upper hand in leasing arrangements.

That’s already playing out in Brisbane, which is now recording the fastest net effective rent growth in the entire AsiaPacific region with a 23.5% boost over the past three years, giving landlords a clear advantage in leasing negotiations.

Chart: APAC Net Effective Rent Growth

Investors entering today are effectively positioning ahead of that rental growth cycle.

“Real estate cycles are driven by supply, and right now, future supply is falling away,” he says.

Buying future income at a discount

Perhaps the most compelling part of the opportunity lies in pricing.

Nguyen notes that many Brisbane office assets are currently trading 15-30% below replacement cost, meaning it would be significantly more expensive to build them today than to buy them.

That creates both downside protection and upside potential.

“It’s difficult to justify delivering new competing supply, and at the same time the market is underestimating forward rental growth,” he says.

Add in built-in rental escalations, often linked to the Consumer Price Index (CPI), and commercial property begins to look increasingly attractive in an inflationary environment.

“You are effectively buying future income at a discount and that income is growing over time.”

Overblown AI fears

One of the biggest concerns for office investors is whether AI and hybrid work will structurally reduce demand for space and seats required by businesses. Nguyen acknowledges the uncertainty but pushes back on the bearish narrative.

“As work becomes more complex and innovation-driven, collaboration becomes more important, not less.”

Importantly, demand in Brisbane is no longer reliant on a single sector. Instead, it is driven by a diversified mix of government, professional services, and financial institutions – typically more stable, institutional tenants.

The key, Nguyen says, is understanding your tenant base – not making broad assumptions about the future of work.

The playbook

So, how is RAM positioning for Brisbane’s office opportunity?

Nguyen says it starts with thinking beyond the asset and focusing on the people using it.

“The way we think about it is working back from what the tenants – and more importantly their employees – actually need to perform at their best,” he says.

That means targeting high-quality, A-grade CBD assets with strong connectivity, modern amenities, and environments that make coming into the office worthwhile.

Location is critical. One example is 333 Ann Street, which is a 23-story A-grade office tower that sits just a minute’s walk from Central Station, with a major bus interchange nearby, giving workers seamless access across the city.

“It’s not just about being close to transport –  it’s about being part of a multi-transport network that makes it easy for people to get in and out of the office,” Nguyen says.

Just as important are the in-building amenities, including quality communal spaces, lifestyle features, and the all-important change rooms for those squeezing in a river run during the workday.

Why it ticks the boxes

From an investment perspective, the RAM 333 Ann Street Trust ticks all the key boxes.

Stable cashflow is supported by 99.2% occupancy, and a diversified, high quality tenancy profile. With a weighted average lease expiry (WALE) of 3.2 years, near-term re-leasing opportunities offer further upside.

The property currently sits around 20% below replacement cost, offering a margin of safety alongside both capital and income upside

For Nguyen, it highlights RAM’s broader strategy: acquire quality assets in supply-constrained markets, grow income through leasing and repositioning, and exit into a stronger market as conditions tighten.

“We’re not chasing the market … we’re positioning ahead of it,” he says.

Learn more about the RAM 333 Ann Street Trust here.