Speculative Fitouts in the Brisbane Market
Tuesday, 18 Jul
In recent years, the Brisbane office market has seen a change in rental trends, with landlords having to adapt and take proactive measures to ensure their assets appeal to a wider demographic in order to boost their return on investment. One such strategy is a speculative fitout.
Speculative fitouts are a popular option for clients seeking to invest in innovative, flexible and inspiring fitout solutions as a method of repositioning a building and increasing its profile. Similarly, clients may also choose this tactic as a means of minimising vacancy rates. This is achieved by splitting up floor plates into multiple tenancies in order to attract smaller businesses, which may not necessarily have readily available capital to spend on a fitout. Ordinarily, these smaller tenancies are leased a lot faster than whole floor plates waiting for larger, more corporate companies to occupy them. This in turn, ensures that landlords are not losing money while they wait.
Clients considering the option of a speculative fitout will find that the budget will vary depending on the grade and specifications of the prospective building. For example, a highly specified ‘A-Grade’ spec fitout would typically have a budget of around $850 – $950/sqm; whereas a lower grade or less detailed speculative fitout would have an estimated budget of about $700/sqm.
Another aspect to consider is alteration requests from prospective tenants, as this can be one of the biggest hurdles throughout the speculative fitout process. Albeit safeguarding a high-value tenant is good for landlords in the long run, drastic changes to a tenancy’s layout or finishes during the construction phase can be costly. Nevertheless, through implementing certain design strategies during the planning phase, landlords can minimise excessive expenditure and long vacancy periods.
Further to this, the Brisbane market also experienced a trend dubbed ‘the beige effect’, whereby it was flooded with bland and neutral speculative fitouts. However, Priority has an implemented and proven design strategy that ensures all speculative fitouts are unique with a point-of-difference, whilst simultaneously appealing to a broad market. This method has resulted in above-average leasing rates over the past 18 months, with nearly 60 percent of Priority’s speculative fitouts being leased within the first three months of practical completion. Tenant feedback has revealed that one of the most influencing factors during the decision-making process has been that Priority spaces are engaging and memorable. For instance, Priority’s latest speculative fitout at Level 18, 127 Creek Street (142m2) experienced multiple interested parties and positive feedback from the market, even prior to its practical completion earlier this month.
While there are several aspects to consider when building a speculative fitout, if done correctly the benefits far outweigh the risks. This is why it is crucial to appoint experts, such as Priority, who have a proven track record of successful projects.