Sydney and Melbourne are leading the way with five of Australia’s six major CBD office leasing markets experiencing positive net absorption in Q1 2015, research reveals.
Data from JLL Research reported that 85,400m2 of new stock was absorbed into the Australian CBD office leasing market in the first three months of 2015.
JLL head of office leasing, Australia, Tim O’Connor, said the Sydney CBD had accounted for 34,900m2 in the first quarter, with the city’s vacancy rate tightening to nine per cent, while Melbourne recorded 52,000m2 of positive net absorption in the same period.
“Sydney is following the same trend as other major western finance centres,” he said.
“New York, London, Boston and Frankfurt have all recorded a tightening in vacancy rates between 2012 and 2014.
“However, the finance sector is not the locomotive of growth — headcount growth is strongest in the professional services sector — technology firms, management consultancy and mid-tier legal firms.
“Increasingly, vacancy is becoming fragmented in the Sydney CBD and the number of options for large space users, outside of development stock, is declining. We are starting to see the first signs of competition for space and incentives are expected to move lower over the second half of 2015.”
With Sydney and Melbourne leading the way in Q1, Brisbane also recorded positive net absorption for the first time since Q3 2012, however, O’Connor warned “we will not see a Lazarus-like recovery in tenant demand”, with businesses taking a considered approach to space requirements and the lease negotiation process will remain protracted over 2015.
While Sydney, Melbourne, Brisbane, Adelaide and Canberra all recorded positive net absorption over the first three months of the year, Perth’s CBD market has continued to struggle, with the vacancy rate increasing to 16.6 per cent in Q1.
