This article is from the Australian Property Journal archive
OFFICE landlords of Sydney CBD buildings will take comfort from new data showing that tenants are not just actively looking for new digs, but looking to occupy more total space.
JLL analysis of formal tenant briefs in the market for January and February this year shows that Sydney accounts for 60% of all tenant briefs across Australia’s office markets, recording 32 in January alone, in line with pre-pandemic levels.
While the total Sydney CBD figure for the first two months was lower than 2021, the total square metre requirement was higher. In February, the size requirements of formal tenant briefs increased 46% and 57% on 2020 and 2021 figures, respectively.
“Organisations are focusing on enhancing collaboration and providing improved amenity, which in some cases is leading to increased footprints and supporting positive demand,” JLL’s head of Sydney CBD leasing, Will Hamilton said.
Data for the Sydney CBD showed tenants who came to market in January are currently seeking 23,000 sqm of space to occupy, For February, the figure is estimated at a further 37,000 sqm of space, more than double for the same period two years ago.
About 89% of public market briefs in the month of February had a preference for fitted premises.
“Occupiers are looking to upgrade into better quality office accommodation that offers higher ESG credentials, better amenity and overall experience for their people. We expect this to remain a key theme for 2022,” Hamilton said.
The rebound in demand likely means that effective rents have bottomed out.
Premium and A-grade office space had the highest levels of tenant inquiry.
The 2022 figures follow 10,800 sqm of net absorption in the Sydney CBD during the December quarter, marking the third consecutive period of positive demand.
The Property Council of Australia’s latest office occupancy survey showed a lift in workers returning to the office in Sydney as the Omicron wave passed and workers returned from holidays. January saw a low 7% occupancy rate, which increased to 18% in February as mask mandates and work from home orders were lifted. Vacancy was 9.3% in January.
“Sydneysiders have been presented with a number of challenges in the first few months of 2022 that have been viewed by many as roadblocks to coming back to the office,” JLL’s office leasing NSW director, Justin Hayes said.
“But we are now seeing activity is moving back to pre-pandemic levels. Anecdotally, we are increasingly hearing citygoers and CBD workers alike describe the city as getting busier.
King Street café Sevens Specialty Coffee reported the number of coffees sold has increased exponentially since the start of the year, at an average of 15% week-on-week.
