office colleagues
CBRE expects the demand for co-working space to increase this year. Image – Canva
  • Industries such as Public Administration and Superannuation recorded positive net absorption
  • Canberra recorded the highest tenant movements for 2020
  • CBRE expects tenant movement to slow this year

CBRE Research has undertaken an analysis of tenant movement across the major capital city office markets. Whilst absorption fell nationally, as expected, some industries performed better than expected.

The report comes as the Property Council of Australia (PCA) released its own office market report last month.

Canberra recorded the highest volume of tenant moves in 2020.  Thanks to strong fiscal spending by the Federal Government, the public sector, unsurprisingly, remained resilient last year which is likely to have supported the office market in Canberra.

This is backed by the fact that Public Administration and Safety was the top industry defined by net positive occupier movements in 2020.

Information Media and Telecommunications recorded the greatest decrease in net occupier movements. CBRE said this was primarily due to Telstra’s portfolio cost reduction program, which is ongoing nationally.

Legal services saw a contraction driven by the pandemic itself and advances in technology, according to Joyce Tiong, the Head of Office Occupier Research at CBRE, who says this applies to other industries.

“Changes to market dynamics and the uncertain economic outlook are expected to see this industry contract further over the near term.

“A similar trend was observed in the energy industry, in which companies are reviewing their office footprint in response to the pandemic.”

Joyce Tiong, CBRE Research

Nationally, gross absorption fell by 7% in 2020.

Notably, Canberra and Melbourne were the only capital cities that did not record gross absorption falls in 2020. The rest of the capital cities recorded significant falls with Perth falling by 88%.

Notably, expansionary activity performed well during 2020 despite the generally weaker market conditions.

For the first time since 2018, superannuation funds expanded their net absorption. However, the early release of superannuation and social assistance payments may have an impact on revenues in the industry, which the report said could impact near-term office space demand.

Although co-working operators saw their net absorption declined by two-thirds during 2020, this industry remains the main driver of net absorption nationally, a position it has held since 2018.

Mr Tiong did add that he expects the demand for co-working to remain the most prominent in new office developments across Australia, however, he warns that tenant moves are expected to remain slow this year.

“The pandemic is likely to see the adoption of more flexible working practices and the evolution of a hybrid workforce: a trend that will support ongoing demand for flexible space.”

“Despite improved enquiry levels and inspections, CBRE expects to see tenant moves remain constrained over the next 12-18 months as office occupiers adapt to COVID-19 and reconsider their future real estate strategies.”

Joyce Tiong, CBRE Research




You May Also Like

“Sydney setting the pace”: CBD office rents march higher

Cushman & Wakefield’s quarterly Office Marketbeat reveals 2.9% quarter-on-quarter uplift in Sydney

Canberra office market shows impressive resilience and growth

The market is underpinned by low vacancy, large developments in the pipeline and strong rental growth

Accenture and Lendlease to expand data insights platform

The platform which uses AI and virtual reality will be expanded to increase digital and in-store visits.

Demand for life science assets on the rise in Australia

Australians are getting older and this is contributing to the increase in demand for life science assets across Australia

Top Articles

PropertyGuru Asia Property Awards (Australia) returns for its 7th edition, including several brand new award ...

This year's awards include several brand new categories, with entries closing 2 August 2024.

Rentvesting in Australia: A deep dive

Rentvesting offers an alternative path into the property market for priced-out first-time buyers.

Housing crisis survival guide: How to buy your first Australian property

Three property experts give the low down on how to nab a home in this tough housing market.