- Available space has declined by 9.4% across the five largest markets
- Sublease availability is the lowest in Perth since mid-2020
- Booming businesses, such as those in the resources, have looked towards flexible work spaces
A new report from CBRE has revealed that despite several months of lockdowns across Sydney, Melbourne and Canberra, office sublease availability across the major cities has fallen to the lowest level in a year.
The ‘Q3 2021 Sublease Barometers’ report shows that across the combined Sydney, Melbourne, Perth, Brisbane and Adelaide markets, available space declined by 9.4% on a quarterly basis to 344,000 square metres. This had peaked at 428,600sqm in January.
Sydney recorded a 20.9% decrease, while Melbourne fell 1.6%.
“Despite extended lockdowns in Australia’s two biggest office [spaces], the national sublease market continued to recover during Q3 underpinned by some major stock withdrawals, a slowing in new sublease availability and an uptick in sublease transactions,” said Mark Curtain, CBRE Pacific Head of Office Leasing.
Australian CBD Sublease Availability
“Overall, we expect sublease availability to continue to decline in most markets over the coming months as occupier demand increases and as tenant contraction begins to ease.”
Mark Curtian, CBRE Pacific Head of Office Leasing
What about Perth?
An interesting office space market to look at is Perth.
Both Perth and Adelaide have sublease availability at their lowest levels since before the pandemic began last year.
Both cities endured less time in lockdown or restrictions as compared to Melbourne and Sydney.
“With minimal Covid cases and Western Australia avoiding lockdowns throughout the majority of 2021, sublease availability has declined to 34,700sqm – the lowest level since June 2020,” noted Andrew Denny, Senior Director of Office Leasing for CBRE in WA.
“The decrease has been a result of multiple withdrawals from the market, as well as some sublease transactions.
“Information Media and Telecommunications and the Mining sectors continue to be the primary drivers of sublease availabilities, however, there were three withdrawals across these sectors throughout the quarter.”
Mr Denny added that while sublease availability in the Perth CBD market is minimal, 10,000sqm has been added to the market due to the nearly completed Capital Square Tower 2 building, accounting for 29% of all availability.
Alternative to office space
Due to only brief periods when it was mandated, working from home is not as commonplace in Perth compared to the eastern states.
However, this hasn’t stopped employees from wanting flexible arrangements such as flexible work spaces and arrangements.
The Property Tribune spoke to Claire Duncan of Victory Offices in Perth, a flexible work space provider that has 23 locations across Australia with over ten different office solutions.
Ms Duncan said working from home has been very appealing from the early stages of the pandemic due to enticing a better ‘work/life balance’ – but nonetheless, office workers miss certain aspects of an office environment.
“For many of those now returning to the office, they are doing so because working from home simply could not offer aspects that were critical to productivity & enjoyment of their day to day life,” she explained.
“These included a sense of community, face-to-face events, on-site support, superior IT setups & a definitive line between personal and professional life.”
“Whilst working from home may have some perks, many things simply cannot be brought into a home office. Working from home has challenges such as distractions (day time TV, children & regular fridge investigations).
“It can be difficult to ‘switch off’ from work when there is no clear distinction between one’s work / personal space.
“Many people are also accustomed to having worked their entire career from an office, so leaving this environment can mean that they are left without the structure & routines they have been used to for so long.”
Claire Duncan, Victory Offices Perth
While many people would assume flexible workspaces appeal most to early-stage startups or creative businesses, many other industries – including mining – are interested in flexible space.
“The reason flexible workspace is now so appealing is because of the flexibility it offers to businesses who may be in a stage of transition such as downsizing or upscaling.
“When comparing costs, flexible workspace is far more cost effective, offering businesses a [way] to include all outgoings, without the commitments of a long term commercial lease.”
Ms Duncan added that resources clients, in particular, find flexible workplaces appealing as they can quickly expand or downsize their office space in line with their project budgets.
“Likewise, projects can run longer than anticipated,” she added.
“The benefit of a flexible space is the option to extend without having to commit to a long term lease. In some instances what is critical is a fast and seamless set up of secure IT systems.
“On other occasions, OH&S requirements for staff are most important.”
Victory employs a tailored membership model where you only pay for services you use – which includes a dedicated receptionist, onsite barista, administration assistant, along with event and meeting coordinators.
In terms of the future, Ms Duncan said she doesn’t believe demand for flexible working space will dissipate anytime soon.
“Flexible workspace will always be in high demand, as it caters to all demographics, is cost-effective, offers flexibility whilst never cutting back on premium inclusions.”
“We are prepared for a new era of business.”