Demand for fitted office space takes Melbourne by storm

Colliers International examines catalyst behind businesses seeking turn-key office solutions

The amplified demand from businesses for quality fitted office suites is taking Melbourne by storm, according to Colliers International’s Office Leasing team.

Associate director for Office Leasing, Milly Stockdale, has examined why businesses are increasingly choosing this option, saying it often came down to value for money.

“There are approximately 99 vacant whole floors available within premium and A-grade buildings in the CBD, Docklands and Southbank precinct but the media deal and enquiry size is between 250sqm and 270sqm, with the most active segment of the market between 100-500sqm,” Ms Stockdale said.

“Colliers International has transacted 125 deals in this bracket for a total of 29,402sqm in the past 12 months in the CBD.”

Ms Stockdale said the tenant profile of these deals was generally growing, with demand from the businesses services, IT, finance and technology sectors emerging.

“Many of these tenants want quality and value in a great location,” she said.

Ms Stockdale said the landlords who were providing quality fitted suites as part of their packages were capitalising on the demand and attracting these types of businesses.

“Successful transactions include Progressclaim, which leased a 360sqm turn-key tenancy at 360 Collins Street, not only in a flight to quality, but also due to its attraction to the highly efficient, spec-created tenancy,” she said.

“Another example is Neota Logic, which leased a 160sqm tenancy at 50 Queen Street.”

Ms Stockdale said fitted suites engaged more tenants as they could touch and feel a tangible finished product, and see their business working in the suite and building.

“For many people, it is difficult to visualise what you can do with a blank canvas, and several tenants struggle to visualise how a refurbished tenancy could house their business and staff,” she said.

“With a fitted suite, incoming tenants can simply bring their staff and their computers and commence work without any major disruptions to their business. The convenience of having a full fitout in situ encourages businesses to relocate swiftly.”

Ms Stockdale identified the cost savings as another key motivation behind businesses opting for fitted suites

“Why spend the extra time, money and hassle planning and costing up a bespoke fitout?” she said.

“Time is essentially money so tenants are increasingly choosing options in buildings that have a modern and functional fitout already in place and are ready to move straight in.”

Ms Stockdale said that although vacancy is reducing, there were still many whole floors available for lease, with landlords gradually realising the benefits of catering to tenants’ desires.

“We’re seeing real advantage for building owners who are geared to subdivide their whole floors and create bespoke tenancies in order to target the most active segment of the market,” she said.

“The reduced downtime, premium face rental, tenants’ improved engagement with their office space, and a better all-round perception of the buildings on the market are all encouraging more landlords to adopt this strategy.

“Not only that, the suites double as display suites for prospective tenants – what you see is what you get.”

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