Sydney, 22 April 2015 –The volume of sublease space in Australia’s capital city office markets rose by 7.2% in Q1to reach 326,446sqm according to the latest Sublease Barometer report from CBRE.
However, the performance of individual markets continues to vary, reflecting the broader trends evident in each of the CBD’s.
CBRE Regional Director, Office Services, Andrew Tracey said improving conditions were apparent in Sydney and Melbourne and, while there was a slight increase in availability over the quarter, listings were being generated as a result of business growth, rather than through tenant contraction.
“In Melbourne, we are continuing to see variation by industry, with reduced sublease availability from the finance & insurance and IT sectors being offset by the space that is being released to the market from professional services firms,” Mr Tracey said.
“In Brisbane, sublease availability has continued to follow a modest but steady downward trend, while availability has risen in the weaker occupier markets of Perth and Canberra, driven by the resource sector and the Federal Government respectively.”
National Sublease Availability by Market – Q1, 2015
Nationally, CBRE’s Barometer highlights that contraction remains the primary motivation for the sublease stock currently available. By industry, the resources sector is responsible for the highest quantum of sublease stock at 29%.
“Perth and Brisbane are dominated by sublease stock from resource related companies, including mining & engineering firms, with contraction the main motivation driving availability,” Mr Tracey said.
“In Sydney and Melbourne the source of sublease stock is more varied, reflecting the more diversified nature of the tenancy mixes in these two cities. There is also greater variation in regard to why sublease space is being offered in these markets, with business growth and relocation the key motivators in Sydney and relocation also a key driver in Melbourne.”
Major Market Trends
Sydney – Total availability increased by 9.9% to 41,597sqm between Q4, 2014 and Q1, 2015. However, significantly more listings are coming to the market as a result of tenants moving for growth rather than negative contraction. The quantum of space available is also well down on the 80,000sqm recorded in 2013.
Melbourne –Availability increased by 6% to 83,598sqm. The reduced space on offer from Finance & Insurance and IT companies has been offset by releases from Professional Services firms.
Brisbane – There was a modest easing in supply, with the quantum of sublease space decreasing by 2,600sqm to 55,300sqm. However, with underlying occupier demand soft and a significant supply cycle looming, more space is forecast to come into the market.
Perth – There was a slight increase in sublease availability, which rose by 924sqm to 72,280sqm. Weak business confidence related to the resources sector continues to hamper occupier demand.
Adelaide – The stock of available space reduced to 16,646sqm, although with new supply entering the market and subdued white collar employment growth forecast, upward pressure may eventuate.
Canberra – Availability spiked by 38.2% to 54,864sqm. Rising availability reflects sluggish occupier demand and Federal Government contraction mandates
National Sublease Availability by Industry – Q1, 2015
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.