Entering into 2018, we believe that the Australian office markets are primed for another year of strong demand and robust leasing activity.
According to our latest Q4 2017 Office Demand Index, transactions across the country saw an increase of 11% on prior year in terms of the total area transacted. Enquiry figures were also up on prior year with a 17% increase on the total number of enquiries and a 14% increase on the total area enquired.
All tenancy sizes within the market experienced an increase in terms of demand in 2017 when compared to prior year. Demand increased by 14% for office space up to 1,000sqm; the mid-market (1,000-2,999sqm) saw an 18% increase in enquiry and for office space over 3,000sqm there was an increase of 22%.
The major movers throughout 2017 were tenants within the Business Services, Education & Training, Finance and Government sectors. The average size of a tenant moving within the Business Services industry was around 500sqm compared to the Education & Training industry, where there was an average tenancy size of 1,800sqm.
With the release of the latest Property Council of Australia vacancy figures, Sydney and Melbourne’s CBD vacancy rates are on par with each other and this is certainly an accurate representation of the competitive tension we are witnessing in these hotly contested markets.
According to Doug Henry, Colliers International Managing Director of Occupier Services, as the leasing market in Sydney continues to tighten, particularly within the CBD, occupiers are expected to consider alternate city fringe locations, such as North Sydney and Parramatta.
Nationally, we will continue to see an increase in sub-1,000sqm tenants attracted to newly fitted out suites offered by landlords. Large occupiers, particularly in CBD locations, will be attracted to office buildings that provide access to shared facilities and flexible workspace options, for example third spaces, client event areas and training rooms.
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