Enquiry for office space across Australia’s capital city markets increased 34% from the same quarter last year, according to Colliers International’s latest Office Demand Index.
Demand increased across each size segment, with the largest rise occurring for space over 3,000sqm experiencing a lift of 53% on the prior year, indicating enquiry has been driven from larger businesses in the market.
In Q3 2017 there was a total of 217 deals completed for over 160,000sqm of office space and a total of 647 deals for 516,155sqm year to date at the end of September, which is a 0.2% increase on the total number of deals and an 8% increase on area transacted compared to September YTD 2016.
“The national office market is experiencing a buoyant period with Sydney, Brisbane and Perth each recording their most active quarter for the year,” said Simon Hunt, Managing Director, Office Leasing at Colliers International.
“Brisbane and Perth were stand-out performers with demand increasing in Brisbane by 309% from Q3 2016 to Q3 2017 and in Perth we recorded a rise of 222% over the same period.
“Data from the Office Demand Index also indicates the past quarter has seen larger businesses making more enquiry, and although the enquiry from small businesses has declined, many small businesses are looking to expand the space they currently occupy.”
The Government, IT and Legal sectors were the largest movers in Q3, while the most active movers came from Business Services, with an average deal size of 383sqm.
“The IT sector continues to be very active in finding new premises that satisfy growth requirements,” said Simon Crouch, Head of Tenant Advisory at Colliers International.
“Throughout the last quarter we experienced a large number of global and local IT tenants relocating from serviced offices to larger more permanent premises.
“The legal sector has experienced strong movement to improve space utilisation and achieve greater efficiencies. In some instances, relocating has been the best opportunity to implement efficiency and cultural change within legal workplaces.”
More generally, enquiry increased in every market outside of the Sydney CBD and Canberra.
“Sydney CBD experienced strong enquiry in 2016 due to stock withdrawals from the Sydney Metro project and residential conversions, however, given the significant rental increases in the Sydney CBD, we are now seeing a larger number of tenants evaluating Sydney Metro office locations as viable alternatives including larger tenants considering split locations,” said Mr Crouch.
“With tightening vacancy across Sydney CBD, North Sydney and Parramatta many tenants made the decision to renew their leases well in advance of lease expiries to manage risk.”