National sublease availability up, driven by trends in Melbourne. Image – Canva
  • Melbourne's increased sublease availability has driven the national availability up 8.1%
  • Despite this national sublease stock remains 26.3% below the December 2021 figures
  • CBRE anticipates sublease availability declines in the coming months. 

Availability has declined in the office sublease markets of all but one Australian CBD according to the newly released CBRE Sublease Barometer which analysed changes in Q2, 2022.

Melbourne stood out in CBRE’s findings as the only CBD office market to record a rise in sublease availability. Melbourne’s marked trend drove the national quarter-on-quarter sublease availability up 8.1% despite declines in all other capitals.

To place this in perspective, the overall tally of sublease stock is sitting at 268,553sqm, a figure 26.3% below that recorded at the end of 2021. Current stock is also well below the market peak of 428,600sqm in January 2021.

The sublease market encompasses the properties leased by a tenant to a subtenant also known as a sublet. CBRE’s Pacific Head of Office Leasing Mark Curtain highlighted that historically these properties represent approximately 1% of office stock in Australian CBDs.

“The long-term trend remains positive as tenants proactively pursue competitively priced space with high quality existing fit-outs.

“While sublease vacancy will continue to fluctuate in the short term, particularly as major users resolve their long-term office accommodation strategies, we expect it to trend back toward the historic average to represent about 1.0% of Australian CBD office stock,” Mr Curtain said.

Across the Capitals

The square metre of stock in Melbourne had risen by 29.6% in the second quarter of 2022.  Looking towards other sublease markets, Sydney and Brisbane CBDs recorded declines of 4.1%, and 17.9% respectively throughout Q2.

Perth, which has the second smallest sublease market in CBRE’s research pool, saw a 37.4% decline in availability, while Adelaide, with the smallest of the sublease markets, saw its availability remained unchanged.

CBRE Research Senior Analyst Nick Baring predicts further declines in the coming months.

“Regarding the Melbourne market, some occupiers are adjusting their office footprint and are capitalising on strong occupier demand for pre-fitted space.

“That said, sublease activity continues to be fluid and with tenants already in advanced discussions on some of the larger sublease tenancies that have been brought to market in recent months, overall availability is expected to decline in the coming months,” Mr Baring said.

He noted that although office occupiers have had time to get a sense of their office requirements post-pandemic, reviews into the workplace are expected to continue for some time.

“Against this backdrop, we expect the Sydney and Melbourne sublease markets to remain active. Due to cost pressures, further additions and current availability is likely to be absorbed, given most sublease space is fitted and in prime grade buildings,” Mr Baring said.

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