- 75,600sqm of sublease space was leased or withdrawn nationally, offsetting 56,300sqm of new additions
- CBRE’s Pacific Head of Office Leasing noted that a key theme of strong appetite for high-quality fitted office space
- Stock levels are anticipated to keep declining nationally
Office sublease availability has reached a more than two-year low in the third quarter amid increasing demand for high-quality, pre-fitted office space.
Available space dropped 7.3% to reach the low of 246,027sqm according to a newly released Sublease Barometer from commercial real estate services and investment firm, CBRE.
The research found that of all the capitals, Melbourne recorded the largest q-o-q fall in sublease availability in Q3 of 21.3%, representing circa 29,500sqm of space. It was followed by Perth with a 19.9% fall, representing about 1,400sqm.
Although there were new additions to the office sublease market totalling around 56,300sqm, they were offset by the 75,600sqm of sublease space that was leased or withdrawn nationally.
As of Q3 2022, more than 90% of Australia’s total sublease availability was in prime-grade buildings, with less than 10% of this being non-fitted-out space. CBRE’s Pacific Head of Office Leasing Mark Curtain has observed a robust demand for this high-quality space.
“The strong appetite for high-quality fitted office accommodation has been a key theme across the national office market over the past two years.”
Mark Curtain, CBRE’s Pacific Head of Office Leasing
“This trend has aided the recovery of the sublease market, with availability having fallen to the lowest level in over two years after hitting a pandemic peak of 428,600sqm in January 2021,” Mr Curtain said.
Defying the national trend, Brisbane recorded the largest increase in sublease availability. The city saw a 7,400sqm influx of available sublease space, representing the first quarterly increase after five consecutive quarters of decline.
Adelaide also went against the national pattern recording a net increase of 4,200sqm over the quarter. Sydney held relatively stable with a net increase of less than 100sqm recorded over the same period.
Low availability here to stay, for now
Mr Curtain said that there is anticipation for “…strong transactional activity to drive further stock reductions in Q4,” said.
CBRE’s Head of Forecasting and Data Analytics Joyce Tiong has conveyed a similar sentiment.
“While sublease availability is expected to remain fluid as corporates continue to assess their corporate real estate strategies, the ongoing flight-to-quality by tenants and increasing demand for A-grade, pre-fitted space is anticipated to offset potential new additions in the near term,” Ms Tiong said.