Australia's capital cities are experiencing a revival in their CBD office leasing markets, new research from property manager, JLL, reveals.
Data for 4Q 2014 showed the market had recorded positive net absorption of 16,200 square metres of new space for the second successive quarter, however the national CBD office market vacancy rate remained unchanged at 12.5 per cent.
JLL national director of research, Andrew Ballantyne, said the absorption of new office space was predominantly driven by the Sydney and Melbourne markets, with 70,000 square metres of space being absorbed in Sydney alone over the course of 2014.
"Sydney and Melbourne both recorded a tightening in vacancy, while vacancy moved out sharply across all other CBD office markets," he said.
While Sydney's vacancy rate tightened to 9.5 per cent, the national CBD office market vacancy rate remained unchanged at 12.5 per cent.
JLL's Head of Office Leasing, NSW & Australia, Tim O'Connor said the rate of net absorption had been surprising in Sydney over 2014.
"The recent resurgence in the Sydney CBD leasing market has been led by strong tenant demand for A Grade space. Tenants in the technology and technology-related sectors are expanding headcount rapidly, while there are tentative signs that the finance sector is no longer in consolidation mode," he said.
"The CBD has also benefitted from a shortage of good quality space outside of the CBD. As a result, a number of companies have centralised operations into the CBD. In 4Q14, Campaign Monitor at 201 Elizabeth Street and Info Track at 135 King Street both leased space in the city.
"The Sydney CBD leasing market is expected to gather further momentum over 2015. As a result, a number of tenants will be unable to secure their first choice of accommodation and there will be downward pressure on leasing incentives over the course of the year."
