Melbourne, 29 October 2013 – Moves by ANZ and NAB have significantly reduced the stock of sublease space in the Melbourne CBD, however supply levels remain above historical averages according a new report from CBRE.
The firm’s Sublease Barometer tracks both the volume of sublease space and the trends occurring within different industry groups and market sectors in Melbourne.
The September report highlights that the stock of sublease space decreased by 5,985sqm during the month to 74,860sqm.This is significantly reduced from the year high of greater than 100,000sqm. Most of the movement from the previous report occurred in 55 Collins Street, after an ANZ operational restructure led to the bank removing from the market 12 of the 16 floors it had been looking to shed.
Elsewhere, NAB has elected to backfill staff into 500 Bourke Street, which it was previously seeking to sublease.
Nevertheless, the trend to sublease remains ever present, particularly in the finance and insurance sector which accounts for 20,000sqm of the sublease space on offer in Melbourne.
During September, a range of mining, manufacturing, construction and IT tenants also brought new sublease space to the market. One of the main tranches came about as a result of Transurban’s relocation to 727 Collins Street, Docklands which resulted in 6,453 sqm of space being made available at 505 Little Collins Street.
Business contraction has been one of the other drivers of new space coming to the market, particularly in the IT sector, with Service Stream and Aegis bringing to market a combined 5,908sqm of sublease space.
CBRE Senior Director, Office Services, Chas Keogh said soft occupier market conditions had kept the volume of sublease stock above historic levels in Melbourne.
However, he noted that a flight to quality had emerged as one of the other key influencers.
“While contraction is the underlying driver behind half the current stock of sublease space, it appears that relocation has also become a major factor, accounting for 27% of the sublease space available, up from 16% in August,” Mr Keogh said.
“Some businesses are capitalising on opportunities to take advantage of high incentive levels to move to better quality space, and take the risk in subleasing their older-style premises or sub-leasing expansion space in their new premises.”
This was evident in the September sublease data which shows that the volume of A grade stock on the market decreased by 21% while the amount of B-grade space rose from 6,904sqm to 14,293sqm over the course of the month.
Tenancies of greater than 1,000sqm account for 72% of the sublease space available. The largest available option is the 8,000sqm of ground floor and mezzanine space in the Good Shed, which is being offered to the market by the Building Commission and Places Victoria.
For Australian/international news or global stories, follow us on Twitter.About CBRE Group, Inc.
