• +61 (3) 5911 7000

Demand for sublease space on the rise

Better Loan Solutions in Mornington PeninsulaLearning CentreInsights

Demand for sublease space on the rise.


With workers headed back into the office, demand for sublease space is rising – especially in the smaller capital cities.


According to CBRE, sublease space in Brisbane, Perth and Adelaide now represents less than 0.5% of each city’s total office stock, a fraction of the current availability in Melbourne (2.2% of total stock) and Sydney (2.4%).

Sublease availability across Australia increased by 0.6% to 258,576 square meters in the second quarter, representing 1.6% of total office stock. Sydney saw the largest quarter-on-quarter increase, with sublease space now accounting for 2.4% of stock, up from 2% in the first quarter. Meanwhile, Melbourne saw a decline from 2.4% to 2.2% due to lease deals reducing the volume of stock.


CBRE’s Head of Office Research Tom Broderick said smaller capital cities experienced a surge in demand for several reasons.


“The return to office and physical occupancy has generally been better in these markets. Also, the average tenant size is smaller, and generally it has been the larger occupiers who have looked to consolidate their footprints. These markets also have less exposure to financial and technology companies, which have contributed the most to the sublease market of late.” Mr Broderick said.


Tom Broderick, CBRE’s Head of Office Research said Brisbane is seeing strong leasing conditions with the city’s availability representing just 0.3% of stock – the tightest in the country.


Perth’s sublease availability dropped by almost half to 0.4%, driven by a strong local economy, while Adelaide’s availability remained steady at 0.4%. CBRE Director of Office Leasing Chris Fisher said the recent increase in Sydney is due to tenants seeking flexibility.


“Combine this with economic headwinds and a desire to cut costs and offloading under-utilised office space is an easy solution. However, it is certainly not a blanket approach across the CBD, with the majority of tenants moving to increase their footprint.


Mr Fisher said the tech sector, which has embraced hybrid working, is seeing sub-lease space increase, while a number of tech firms “banked” space when they were growing exponentially which they no longer need.


“Large corporates also feature, with their slower return to work edicts resulting in surplus office space, with M&A activity being another driver, leaving some space redundant as businesses merge their operations.


The pleasing part is there is activity in the market and healthy turnover in the sublease space. Whilst decision times are slower, underlying demand is strong and the benefits of sublease space with quality fitout and below market rent is being embraced by sections of the market,” he said.

Use a good accountant.

A reputable accountant who understands property can not only simplify this process but
also help maximise your tax return. Spend time researching or seeking recommendations
to find an accountant experienced in real estate investment.


CONTACT US CONTACT US


Education Bonds: Saving for Private School

Darren and Jenny have one child and are planning for his secondary education at a Melbourne private school. Utilising education bonds, they aim to ensure they have sufficient funds to cover all tuition fees and associated costs throughout his education.


Navigating Australia’s Bracket Creep: Strategies for Managing Rising Tax Liabilities

As Australia's highest marginal tax bracket impacts more individuals, a growing number of Australians face rising tax obligations due to "bracket creep," where wage growth outpaces tax rate adjustments. This trend is expected to persist, with tax-efficient strategies the backbone for financial advice to help individuals secure long-term wealth.


5 things to know about car loan refinancing

Car loan refinancing involves replacing your existing car loan with a new one. The new loan pays off your existing debt, allowing you to start making payments on the refinanced car loan.