Sydney, 16 January 2014- The volume of Sydney sublease space has continued its downward trend throughout December, driven by a major reduction of space in the finance and insurance sector.
CBRE’s latest Sublease Barometer, which tracks both the volume of sublease space and the trends occurring within different industry groups and market sectors in the Sydney CBD, highlights the decline for the last quarter of 2013 as landlords looked to complete deals before the new year.
The Sublease Barometer shows that the volume of sublease space reduced by 1,985sqm in December to 62,843sqm. This followed a 6,500sqm decline in October.
CBRE Associate Director, Office Services, Stuart McSorley said contraction remains the main motivation for sublease, responsible for 70% of space on the market.
“We expect this trend to continue as overall conditions in the economy, particularly the office market, remain challenging on the back of subdued GDP figures throughout 2013,” said Mr McSorley.
CBRE’s Barometer shows that sublease options over 1,000sqm dominate the market, accounting for 75% of the total availabilities. This includes seven sublease options greater than 2,000sqm.
The City Core is the largest contributor of space, with 43%, up from 39% in November, while the Western Corridor has dropped from 44% to 39%.
Over the past quarter, the lease expiry profile has realigned to see the majority of space expiring in 2016.
“Up until recently, 2014 saw the highest rate of expiry, however we have recently seen building owners working with tenants to convert sublease opportunities into new direct leases, taking them out of the sublease equation.”
“Businesses are still looking to contain costs, particularly the finance and insurance sector. However with an employment increase in the sector and the downward trend in the last three months of the year, we expect to see some moderation in sublease space moving into 2014,” Mr McSorley concluded.
Sublease by Industry
