Sydney, 17 July
major increases and decreases in total sublease space across the country last
quarter, Q2 2014 has seen a flattening out across the sublease office market.
Q2 National Sublease Barometer shows that Sydney and Brisbane both recorded
similar levels to the March quarter, Melbourne and Perth a slight increase, and
Canberra a slight decrease.
Regional Director, Office Services, Andrew Tracey, said sublease continues to be
a major factor in most markets but can appear and disappear very quickly as
business sentiment changes.
“Good fitted out quality
space in core locations continues to move reasonably well provided longer term
tenure is available. Significant tranches of sublease space are on offer across
the country as ‘direct deals’ with building owners being prepared to surrender
space if new incoming tenants have quality covenants. Poor space or poor fit
outs are unlikely to move and will be ‘deferred’ vacancy to be dealt with at
lease expiry,” Mr Tracey said.
Sublease Barometers track both the volume of sublease space and the trends
occurring within different industry groups and market sectors.
downward trend in Sydney’s sublease space has flattened out in Q2 2014 after a
substantial period of decrease in space since Q4 2013, with total space
hovering around the 40,000sqm mark for four consecutive months.
saw a slight increase in Q2, up 1,934sqm to 75,126sqm as of June 2014. Large
additions to the sublease barometer included 3,800sqm at 818 Bourke Street by
Ericsson and 1,500sqm at 825 Bourke Street offered by Fujitsu. Both sublease
offerings were motivated by contraction.
also saw a slight increase in the June quarter, rising 2,732sqm to 63,452sqm. Mining
and engineering tenants actually saw a decrease in space, but a sharp increase
for finance, professional services and legal tenant pushed the figure higher.
seeing an increase last quarter, Brisbane has remained steady in Q2 at around
79,490sqm of sublease space available. Although this is still well above the
historic average, the figure will drop further in the second half of 2014 with
the expected commitment by Suncorp to almost 7,000sqm of Rio Tinto sublease
space at 123 Albert Street.
was the only city to see a decrease in space, albeit a moderate one, as total
sublease space dropped by 5% to 33,500sqm.
Mr Tracey said across the markets State
and Federal Government continues to be a major contributor to the amount of
sublease space, affecting Canberra in particular.
“Many businesses are
reluctant to share buildings with Government, especially when at present large
numbers of alternative options exist. Much of this Government sublease space
could end up being ‘shadow’ vacancy that will not be removed from the market
until lease expiry.”
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