Free office space is becoming harder to find across Australia, research from property management group, JLL, reveals.
JLL Research data for Quarter Three 2014, released this week, revealed that vacancy rates the national CBD office market had stabilised at 12.4 per cent, with sub-leases availability falling in Adelaide, Brisbane and Perth, while new space was absorbed in the Melbourne and Sydney markets.
The latest figures recorded positive net absorption of 19,800 sqm over the last three months, with Sydney recording its third successive quarter of positive net absorption, with 42,400 sqm absorbed into the city's CBD in the first nine months of the year lead by demand from the IT sector, JLL's Head of Office Leasing NSW and Australia, Tim O'Connor said.
"The recovery in the Sydney CBD leasing market is not being led by traditional larger space users — tier 1 legal firms and financial institutions," he said.
"Technology and technology-related firms are expanding, while the tenant market below 800 sqm is very active."
"Sydney is following the same trend as east coast US office markets — technology firms are expanding, upgrading and locating themselves in core locations alongside traditional users including investment banks.
"LinkedIn has committed to relocate to 1 Martin Place and will occupy space in the same building as Macquarie."
Meanwhile other areas of Sydney have also experienced an increase in demand for office space, with vacancy rates in North Sydney falling to nine per cent over the last quarter as 13,400 sqm was absorbed, with vacancies in Chatswood also expected to fall below 10 per cent in the coming months.
O'Connor said the increase in demand of office space in the Sydney area will see greater competition in the leasing market.
"Tenants have had the luxury of time in the Sydney CBD over the past three years," he said.
"We only have to see a few instances of tenants being unable to secure their first choice of accommodation before two things happen — the first is that decision making timeframes begin to reduce and the second is there will be downward pressure on incentives."
O'Connor added that the Melbourne CBD was "experiencing another round of centralisation", with the vacancy rate in the Victorian capital falling to 10.6 per cent.
