Australian office leasing market growth led by New South Wales
The New South Wales office leasing market is leading the way in the Australian commercial market in the first half of 2015, with almost twice as much office space leased year on year.
There has been a 13% increase in the number of leasing deals done nationally in 2015, compared to the first half of 2014, according to figures from Colliers International.
The amount of space leased is up 22% from 198,360 square meters last year to 241,551 square meter this year, led by New South Wales with 112, 937 square meters leased year to date, compared to 64,629 in the first half of 2014.
Cameron Williams, Colliers International National Director of Office Leasing, said there was increased traction nationally at the larger end of the market.
‘This is in contrast to 2014 enquiry data, which is a reflection of what we are seeing on the ground. Larger firms are driving demand for office accommodation in 2015 compared to 2014, when we saw smaller space in strong demand,’ he said.
‘Our enquiry data for the second quarter of 2015 also shows a significant shift in the industries searching for office space,’ he added.
The research also reveals that in 2014 the government sector dominated as they put large requirements into the market. However, moving into the second half of 2015 it is business services, communications and finance that are catching up and dominating both in enquiry levels and leasing deals being negotiated.
Businesses searching for substantial office accommodation were driving demand across key office CBD markets, with the business services, communications and finance sectors accounting for the lion’s share of enquiries.
Overall, enquiries for office space nationally increased by 31% from the second quarter of 2014 compared to the second quarter of 2015 for office space in the 1,000 square meters to the 3,000 square meters category.
Sydney in particular saw an increase in this category, with a 25% rise in demand from the first quarter of 2015 with 51,003 square meters to 63,650 square meters in the second quarter.
Williams said activity was increasing in the Sydney CBD office market, particularly in the last quarter. ‘The big change has been growth. The tenants that are in the market at the moment are predominantly growth driven,’ he explained.
‘The growth in the market is mostly being driven by technology companies and finance. At the smaller end of the market there has been a lot of activity from Asian investment companies that have a preference to be located in Sydney’s midtown,’ he said.
‘This growth is naturally having a positive impact on net absorption and lessors are becoming more confident,’ he added.