Northeastern Queensland’s Townsville CBD office market is experiencing its strongest occupancy levels in premium and A-grade office spaces since the mid-1990s, according to a recent survey by Knight Frank.
The surge in demand has driven significant growth in A-grade rental rates, marking a notable recovery for the coastal city’s commercial property sector.
Knight Frank’s Office Occupancy Survey, conducted in December 2024, revealed a vacancy rate just below 4.85 per cent for premium and A-grade spaces in Townsville’s CBD.
This rate is among the lowest in any Australian region or metropolitan location, second only to Hobart. Out of the 80,460 square metres of high-quality office space available to Townsville, only 3,900 square metres remain vacant.
By comparison, the vacancy rate for premium and A-grade spaces in 2019, just before the COVID-19 pandemic, stood at 17.2 per cent. Lower-grade office buildings, however, continue to struggle, with vacancy rates exceeding 30 per cent, according to the survey.
The survey also highlighted that the tightening market has led to rising rents for high-quality properties. Premium-grade spaces now frequently command rents above $750 per square metre, while A-grade rentals are averaging $500 per square metre.
Incentives for new tenancies in these categories have also decreased significantly, falling from over 35 per cent to between 10 per cent and 20 per cent, alongside longer lease terms emerging.
Matt Ryan, Knight Frank’s senior partner, valuation and advisory, stated that the low vacancy rate in this area has led to the rise in rent for premium and A-grade office assets since the 1990s.
“Anecdotally we can say this is the first time these rents have seen significant growth, and the growth is only just beginning,” he said.
The growing occupancy trend has been fuelled by increased demand from both government and private sector tenants in Townsville’s CBD.
Paul Dury, Knight Frank’s senior partner for agency, highlighted a rise in enquiries for high-quality office spaces, particularly in key locations such as 235 Stanley Street and 520 Flinders Street.
“We are receiving much stronger occupancy enquiry for office tenancies, matching the trend in increasing demand for industrial assets we were already experiencing,” he said.
The Townsville City Council has significantly supported the CBD’s growth by waiving infrastructure charges for employment-generating developments and providing grants to enhance building presentations.
“Over the past decade, a significantly improved standard of accommodation has emerged in the city’s CBD, with new buildings and refurbished established buildings, and we are seeing tenants flock to these properties,” Ryan added.
Dury emphasised that the market no longer relies solely on government tenants.
“There are more than 10,000 employees working the Townsville CBD now, and apart from government, private sector tenants in the resources and renewables sectors now also quite active, as well as tenants crucial in the delivery of major infrastructure projects in the region,” he said.
Knight Frank has monitored occupancies that spread across various sectors in North Queensland, gaining knowledge of how the cities perform.
“We have seen enquiry levels steadily increase over 2024 with the majority coming from retail trade, education and health, Commonwealth government administration and the construction/manufacturing sectors,” Dury said.
“The strong demand is allowing landlords to engage more viably with potential tenants, rather than have to provide significant incentives just to commence negotiations.”

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