Sydney, 26 February
2014 –The volume of sublease space in
the Sydney CBD has dropped below the historic average for the first time since
late 2012 as landlords become increasingly flexible in allowing tenants to
surrender office suites.
latest Sublease Barometer from CBRE highlights the volume of available city space
dropped by 6,884sqm to 55,960sqm during January – well down on last year’s high
of just over 80,000sqm.
Senior Director, Office Services, Jenine Cranston, said there was a greater
sense of optimism in the market which had led, in several instances, to tenants
withdrawing sublease space with a view to reoccupying at some stage in the
demonstrates an optimism and strategic approach not seen in the market
consistently for several years,” Ms Cranston said, adding that landlords were also
actively managing sublease stock and increasingly willing to work with tenants
on sublease solutions.
allowing tenants to surrender leases, owners have the ability to strike new,
longer term lease deals which in turn improves the overall leasing profile of
their buildings,” Ms Cranston said.
also seeing more instances of “blend and extend” deals, whereby the sitting
tenant reduces the overall quantum of space they occupy but takes a longer term
lease over the balance.”
CBRE Sublease Barometer tracks both the volume of sublease space and the trends
occurring within different industry groups and market sectors in the CBD.
decline in January represents the fourth consecutive monthly drop. Since
September last year, there has been a decline of almost 25,000sqm in the volume
of sublease space on the market fuelled by a number of factors – including
landlord renegotiations, space being sub-let and sublease space converting to
Cranston said the finance and insurance sector was also gradually stemming the
flow of sublease space being released to the market, which was a positive sign
the finance and insurance sector still accounts for 59% of the sublease space
on the market, this is continuing to trend downwards,” Ms Cranston said.
Ms Cranston said the expectation was that overall leasing conditions would
continue to prove challenging until late 2014 given the modest outlook for
white collar employment growth.
points noted in the latest Barometer report include:
options greater than 1,000sqm dominate the market, accounting for 75% of
total space. Of these, there are six options greater than 2,000sqm
majority of sublease space on the market (70%) is A-grade stock
City Core and Western Corridor have the highest quantum of sublease stock, each
accounting for 41% of sublease availability