Sydney, 24 May 2013- The volume of sublease space has inched higher in the Sydney CBD to reach 73,872sqm, continuing an upward trend which could negatively impact the city’s overall vacancy rate in 2013.
The increase is highlighted in 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.
The last time the sublease volume was higher was in November 2009, when the quantum of sublease stock was close to 90,000sqm. The level of stock dropped considerably throughout 2010 and 2011 but has been tracking higher since late last year and over April the volume of sub lease stock increased by a further 1.52%.
CBRE Senior Director, Office Services, Jenine Cranston attributed the increase in recent months to financial service tenants shedding more space in further rounds of downsizing.
This has also led to much larger sublease tenancies being made available, with the Barometer showing that tenancies greater than 1,000sqm account for 70% of all options. Indeed, the report shows that there are currently six options available at present of greater than 2,000sqm which combined account for 38,000sqm of sublease space.
“The consolidation of financial tenants continues to have a strong influence on the sublease market and is contributing to the increase in the number of larger sublease tenancies,” Ms Cranston said.
“The finance and insurance sector presently accounts for around half of both the number of sublease opportunities and the quantum of floor space available, with property and business services also accounting for a high proportion of stock compared to other industry sectors.”
Ms Cranston said one alleviating factor for owners was that the majority of sublease options did not have quality, useable fitouts in place – something that a growing number of cost conscious tenants were requiring.
“This said, the increase in sublease stock has undoubtedly put an upward pressure on incentives across the city. During the year we expect to see a number of sublease opportunities converted into direct space if it remains in the market. However, if this upward momentum in sublease space continues, this may negatively impact overall vacancy in 2013.”
The Barometer also highlights that more than half the sublease space available (52%), is situated in the city core.
For Australian/international news or global stories, follow us on Twitter.
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 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 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 atwww.cbre.com.au.