This article is from the Australian Property Journal archive
THE office sublease market has peaked and is set to turn around, according to CBRE.
CBRE’s Sublease Barometer found the availability of space is hovering between 70,000 sqm and 80,000 sqm in Sydney, Melbourne, Brisbane and Perth.
Regional director office services Andrew Tracey said while this is above historic averages, the expectation was that no significant tranches of new sublease space were expected to come to the market in the near future.
“Much of the available stock is subject to very short lease tails with expiries in 2014 and 2015.
“This is more of a deferred direct hidden vacancy issue given the inherent difficulty in leasing space with less than a three year lease expiry. Much of this stock is expected to revert back to direct vacancy, which will significantly reduce the volume of available sublease space,” Tracey said.
The Barometer found in Canberra, just 8,553 sqm of sublease space was available in September, despite continued uncertainty in relation to public sector rationalisation – although this is expected to change any day as various government departments are restructured.
As expected, the mining sector has had a much more significant influence on the Perth and Brisbane markets given the recent slowdown in this sector to which both cities have a high exposure.
Brisbane’s high exposure to government tenants has also resulted in that city being impacted Queensland government job cuts and consolidation, with almost 2,500 full-time equivalent jobs in inner Brisbane cut from the Queensland public service in 2013.
Sydney – the city with the highest capital city exposure to the finance sector – has felt the brunt of low financial market sentiment. However, Tracey said employment in the Sydney finance and insurance sector had increased by 4.5% in the September quarter, outperforming the national figure of 0.4% and continuing the positive momentum from Q2.
Meanwhile a Colliers International found increased business confidence and government activity has contributed to a 22% increase in enquiry for office space compared to last year.
Enquiries for office space in Australia’s CBD and metropolitan office markets have increased from 1,289,418 sqm year-to-date in September 2012 to 1,576,111 sqm year-to-date September 2013. This represents an increase of nearly 289,000 sqm and an additional 422 enquiries.
Office leasing managing director Simon Hunt said the months of August and September had been active, with enquiries up by just over 89,415 sqm, from 222,527 sqm in August/September last year to 311,942 sqm this year.
“This is keeping in theme with the results of the September NAB Sentiment Survey, which noted that confidence has risen everywhere, with particular surges in finance, property and construction. Across the board, confidence is now at its highest level in three-and-a-half years,” Hunt said.
Property Review
