Vacancy rates have pleateaued in the prime grade stock sector over the past quarter. Within the next 12 months it’s expected that there will be a movement towards quality stock, with rental increases remaining subdued. Some upwards pressure will remain on incentives.
Source: Martin Potter, Knight Frank’s director, office leasing, SA
There has been an increase in sublease space. This is due to the efficiency drive to reduce costs and duplication.
Uncertainty remains surrounding Canberra, and while the Commission of Audit is undertaken there have been resulting low levels of demand.
A drop in face rents is being seen as well as an increase in incentive levels.
Source: Nicola Cooper, Knight Frank’s director of leasing, ACT
The vacancy rate has peaked in the short term, with an expectation to fall over the next six months to mid-2014.
The migration of tenants from the fringe and suburban markets inwards, as well as some property being moved towards residential repurposing and sublease space have been the main drivers. This is resulting in incentives that are high, circa 30%, and prime rents holding, circa $460 net.
The 2014 outlook has improved demand as tenants realise the current situation won’t last for long.
Source: Hamish Sutherland, Knight Frank’s national director, office leasing, VIC
Lack of tenant demand and excess sublease space is causing the market to suffer, however there are a large number of requirements and enquiries in the market. The first quarter of 2014 should be revealing about these considerations.
A potential flurry of activity may trigger a positive ipswing in demand through 2014 and into 2015 before further stock occurs in 2016.
Source: David Howson, Knight Frank’s national director, office leasing, QLD
A positive shift has been seen in the market, with enquiry improving during the second half of the fourth quarter in 2013. It is likely this trend will continue this year.
Confidence is growing in smaller business, and the demand for sub-500 square metres continues to remain strong, with incentives driving demand. Landlords are motivated to reduce vacancies by the middle of the year.
Rental growth remains flat, with no forecast for growth this year.
Source: Scott Berriman, Knight Frank director, office leasing, NSW
The flux of the conomy in Perth and with vacancy rates rising, it’s clear there’s very little demand.
The face market rents are falling, incentives are increasing, and they may be reaching a level that will entice tenants into moving.
Source: Greg McAlpine, Knight Frank’s national director, office leasing, WA
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