Demand for office space increases across the country: Colliers International

Government accounts for largest slice of office space leased nationally in first half of 2018

Demand for office space across the country is on  the rise, according to Colliers International’s latest Office Demand Index.

The report has found there was an increase in demand for office space of almost all sizes in Q2 2018, and a 25% increase in demand overall compared to the first quarter of the year. 

Simon Hunt, Colliers International Managing Director of Office Leasing, said the latest enquiry data was reflective of a positive outlook for office demand nationally.

“We have seen an uplift in demand in major office markets across the country in the first half of 2018, including Sydney, Melbourne, Brisbane and Perth,” Mr Hunt said.  

Colliers International recorded 783,106sqm of demand in Q2 2018. 

The Office Demand Index found there was a 49% increase in demand for space above 3,000sqm, and a 15% increase for office space between 1,000-2,999sqm when comparing Q2 2018 data to Q1 2018. 

Mr Hunt said the largest increase in demand for space was seen in the Sydney CBD and Melbourne CBD.

“Sydney CBD is experiencing an influx of demand for larger businesses averaging around 1,188sqm, whereas the Melbourne CBD has an average area of 751sqm even though this market has more enquiry than prior year, this indicates smaller workspaces are in demand here.

“The Adelaide, Brisbane CBD and Melbourne Metro markets are also providing increased enquiry on prior year.”

Luke Dutton, Colliers International Director of Tenant Advisory, said amidst ongoing tight market conditions and increasing effective rents, the Sydney CBD has seen sustained demand from tenants seeking quality premises with proximity to amenity to ensure they remain competitive in securing and retaining talent.

“Sustained business confidence has resulted in a general growth trend across most industry sectors. Notwithstanding this, tenants are seeking out more efficient use of space to offset rising costs,” Mr Dutton said.

The Government remains the dominant player in the office market nationally, due to its larger requirements. This sector has leased the most amount of space, totalling around 72,000sqm nationally. The largest Government deal to date has been for the Department of Home Affairs at 6 Chan Street Belconnen in ACT for over 29,000sqm on behalf of Challenger.

“The business services, financial services and technology sectors also continue to support demand in major CBD markets,” Mr Hunt said.

“Overall, there has been a total of 417 leasing deals concluded for 307,680sqm of office space in the first six months of 2018.”

The business services sector had been the most active in leasing office space in 2018 thus far, with an average tenancy size of 370sqm.

“These types of tenants are looking for small fitted suites on flexible lease terms to facilitate ease of movement during growth phases,” said Mr Dutton. “An example of this is young tech firms moving out of start up hubs into their own premises.

“Flexibility is key to ensure they’re not locked into longer dated leases that quickly become outgrown.”

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Simon Hunt

Managing Director | Office Leasing

Melbourne CBD

As the Managing Director of the Office Leasing Division my team includes over 100 staff and more than 75 leasing operatives across every State and Territory. I have been with Colliers International for 25 years, joining the Office Leasing team in 1993 and worked my way up to Managing Director in 2005.  Along with managing the Office Leasing National Team I hold a number of senior positions within Colliers including a member of the ANZ Executive, Executive Leadership Team and Senior Leadership Team.  I am a Licenced Estate Agent and a member of the Real Estate Institute of Victoria, Property council of Australia and RICS - Royal Institute of Chartered Surveyor.

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Luke Dutton

Director | Tenant Advisory

Sydney CBD

Luke is a Director within the Colliers Tenant Advisory team where his focus is partnering with our clients to formulate and implement bespoke and enlightened corporate real estate strategies aligned with our clients’ objectives. Luke is highly motivated and attuned to delivering the best outcome possible for our clients whilst establishing and enhancing mutually beneficial relationships between tenant and landlord.

Luke has significant experience in the real estate industry having managed large and complex property portfolios for the private and public sector. Luke has previously acted as an Asset Manager for global institutional owner/developer Goodman in both Australia and the United Kingdom. Luke’s experience in both landlord and tenant advisory roles brings significant depth to the team.

Luke has partnered with global clients such as UBS AG, Macquarie Bank, McKinsey & Company and KPMG to name a few.

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