Sydney, 11 December 2013 – The volume of sublease space in the Sydney CBD has declined by more than 15,000sqm in the past two months in a significant market shift.
The latest Sublease Barometer from CBRE shows that the total of city sublease space is moving close to the historical average – having trended well above that level for the past 12 months.
CBRE Senior Director, Office Services, Jenine Cranston said the decline was the result of a number of factors, including a reduction in new sublease space over the month, the withdrawal of some stock and the conversion of a proportion of sublease space to direct vacancy or transactions.
“Recent signs of improvement in the finance and insurance sector have supported the decline in sublease space over the past few months,” Ms Cranston said.
“From a low base, overall white collar employment growth is expected to pick up in 2014, which will see total sublease space continue to trend down next year.”
CBRE’s Sublease Barometer shows that the volume of sublease space reduced by 6,500sqm in November to 64,828sqm. This followed an 8,830sqm decline in October.
Significantly, the amount of sublease space offered by the finance and insurance sector - which has been the main driver of the sublease market - decreased markedly in November to 39,000sqm.
Ms Cranston said business contraction remained the dominant motivation for companies to sublease space as part of a continued focus on occupational costs.
CBRE’s Barometer shows that sublease options over 1,000sqm dominate the market, accounting for 77% of the total availabilities. This includes seven sublease options greater than 2,000sqm.
Space in the Western Corridor continues to trend upwards to now account for 44% of the overall market. On the flipside, the amount of stock in the city core has continued to trend downwards - falling by 2% in November to account for 39% of the market.
“Looking forward, we expect white collar employment growth to remain modest but steady until the end of this year, before averaging 1.1% per annum growth over 2014 and 2015,” Ms Cranston said.
“This will continue to support an improvement in both the sublease market and the direct leasing market in the short to medium term."
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