Australian office market sees record breaking end to 2014
A record breaking finish to 2014 has kick started momentum in the Australian office market in 2015 with demand and deals on the rise, according to a new report.
Indeed, enquiries for the December 2014 quarter were up 75% compared to the December 2013 quarter and the greatest demand was for space 3,000 square meters and above, with this market up a record 173% on the December 2013 quarter.
For the full calendar year, Australian business enquired about 2,256,814 square meters of office space in 2014 compared to 1,813,540 square meters in 2013, a national increase of 24%.
Simon Hunt, Colliers International managing director of Office Leasing, said this points to improving business confidence and 2014 also proved to be a successful year for transacting deals, with the number of leases negotiated up by 28% on 2013 and the amount of space transacted also up from 2013 by 34%.
‘All markets, with the exception of the ACT, saw an increase in the number of deals and area transacted compared to 2013, with Victoria adding almost 100 extra deals to its 2013 tally,’ he explained.
Throughout 2014, a standout performer for number of enquiries and amount of space enquired for was the information technology sector. This sector is expected to also be at the forefront of white collar employment growth in the year ahead, along with the business services and financial services sectors.
‘In 2015, white collar employment forecasts indicate that business services and financial services will show strong demand for office space over 1,000 square meters, pointing to strong short term demand for larger, open plan workplace environments and less decentralisation of employees occurring,’ added Hunt.
Tenants returning to CBD markets was an emerging trend in 2014, and is anticipated to continue as corporates seek central locations, close to amenities to house their administration staff.
According to Deloitte Access Economics’ respected White Collar Employment forecasts, the top five growing office sectors that will lead tenant demand nationally in 2015 will be Business Services, IT, Financial Services, Health and Accommodation services.
‘Based on the net growth in jobs for these sectors, of between 10,000 to 14,000 employees, over 150,000 square meters of space will be required to meet space demand,’ Hunt said.
Simon Crouch, Colliers International national director of tenant representation, agreed that the IT would be a sector to watch in 2015 as while the majority of corporate tenants would remain cautiously optimistic, IT would be one sector which was in expansion mode.
‘This will continue in 2015 until there is some more certainty in global markets. In the year ahead, we are likely to see a continued restructuring or consolidation of space, in particular in the professional service sectors,’ he explained.
‘Some businesses will grow, but pressure on margins is going to ensure that the leaders of these firms will continue to look for opportunities to reduce their overheads and, as a result, cost of space,’ he added.