High quality refurbished office accommodation – the ‘new new” in Regional Queensland

North Queensland is heading into 2026 with serious momentum. Strong equity growth, high occupancy and an expanding economic base across health, defence and renewables are feeding sustained demand for property and we’re seeing it clearly across the commercial markets of Townsville and Mackay.

While many capital city CBDs are still dealing with elevated vacancy and tenant-led leasing conditions, North Queensland is operating differently. Stock remains tightly held and the cost of new supply has increased sharply, so landlords can now benefit from a market where demand for well-located space has become consistently firm.

Median home values have risen around 70 per cent over the past four years, helping underpin confidence across the region. Local business owners have felt that growth directly, not only 7well. Industrial values have also lifted by more than 40 per cent over the same period, reinforcing the depth of activity across the broader market.

Historic Low Vacancy Supporting Stronger Rental Conditions

Vacancy across North Queensland’s office markets has tightened to some of the lowest levels we’ve seen in years, driven by steady occupier demand from government, professional services to the Resources and Renewables sectors and health-related sectors.

Quality space is becoming hard to secure, particularly in modern, well-presented buildings.

Vacancy remains below 7 per cent across Prime and A Grade CBD office stock, and under 5 per cent for industrial warehousing, signalling conditions that continue to favour landlords.

Rents across prime office accommodation have continued to firmed in Townsville, supported by incentive levels that have become low by national standards. For longer-term leases, incentives are typically in the 5 to 15 per cent range, meaning rental growth is being pushed forward by genuine competition for space rather than incentive-heavy deals.

Demand for Quality Refurbishments

What’s increasingly shaping the market isn’t just low vacancy, but tenant preference. Across Townsville and Mackay, occupiers are becoming more selective, with stronger demand for buildings that offer better workplace amenity, upgraded services, sustainability features and a higher overall standard of presentation.

Rather than seeing tenants simply take whatever is available, there is a clear flight toward quality refurbished spaces that align with modern expectations. End-of-trip facilities, efficient layouts, improved natural light, better common areas and upgraded building systems are now central to leasing decisions.

This is where refurbishment is playing, and will play, a critical role. Prudent owners are responding by reinvesting in existing stock, lifting the standard of accommodation available across the region without needing to rely on large-scale new development.

Why New Development Still Doesn’t Stack Up

Despite the strength in leasing conditions, new office development remains difficult to justify across North Queensland because the numbers still don’t align.

Construction costs have risen well ahead of achievable rental levels, and the gap between what is required to make a new build viable and what refurbished space can deliver has widened significantly.

Across the region, the difference between the effective rent required for new commercial office buildings or specialty retail tenancies, and the rents achievable for high-quality refurbished accommodation, now ranges between 50 and 80 per cent.

A clear example is Townsville, where new office buildings typically require effective commercial rates in excess of $850 per square metre, alongside long-term lease commitments, to create viability. By contrast, Prime refurbished accommodation is being delivered closer to $500 per square metre.

Existing buildings are also often acquired well below replacement cost, allowing refurbishment projects to stack up economically in a way that new construction currently cannot.

Until that feasibility gap narrows, refurbishment and adaptive reuse will remain the most realistic pathway for the office market to evolve.

Outlook: Demand Well Supported Across All Sectors

Looking ahead, the fundamentals across Townsville and Mackay remain firmly supportive. With a regional development pipeline committed at an excess of $10 billion, the opportunities for demand to outweigh supply in both the residential and non residential sector will continue.

Industrial conditions also remain a standout. Ongoing land supply constraints across key precincts are expected to keep land values firm, while enquiry for well-located vacancies continues to remain strong. This part of the market remains structurally undersupplied, and demand from logistics, trade and service-based operators shows no sign of easing.

Retail occupancies are also holding up well. With employment demand strong and disposable incomes remaining relatively high across the region, retail space in the right locations is expected to stay resilient through 2026.

Importantly, North Queensland’s continued expansion across health, defence, renewable energy and resources is providing a reliable foundation for commercial occupancy more broadly. These sectors are driving jobs growth, population stability and long-term tenant demand, supporting office, industrial and retail markets alike.

In this context, North Queensland continues to stand apart as a market defined not by development volume, but by disciplined supply, targeted reinvestment and refurbishment-led growth that is delivering real results on the ground