Sydney drives office leasing surge

Office space has become hot property again in the first half of 2015, with almost twice as much space leased in some states compared with the same period last year.

The amount of space leased across Australia jumped 22% from 198,360sqm last year to 241,551sqm this year, thanks to a 13% increase in the number of deals done.

New South Wales led the way with 112,937sqm leased so far this year, almost double the 64,629sqm the state saw rented in the six months to July 2014, according to Collierst International research.

And the leasing growth is tipped to continue, with enquiries for office space up 31% this year.

Colliers national director of office leasing Cameron Williams says the improved leasing performance was due to the size and type of businesses who were taking up new offices leases.

We are seeing business services, communications and finance catching up and dominating both in enquiry levels and leasing deals being negotiated

“This is in contrast to 2014 enquiry data, which is a reflection of what we are seeing on the ground – larger firms are driving demand for office accommodation in 2015 compared to 2014, when we saw smaller space in strong demand,” Mr Williams says.

Two-track economy: Leasing market a tale of two cities

“Our enquiry data for the second quarter of 2015 also shows a significant shift in the industries searching for office space.”

Offices in Australia’s capital cities are hot property on the leasing market in 2015

“In 2014, we saw the government sector dominating as they put large requirements into the market. However, as we move into the second half of 2015 we are seeing business services, communications and finance catching up and dominating both in enquiry levels and leasing deals being negotiated.”

The new research adds weight to expert assessments of Australia’s office leasing market, with some analysts describing the market as a two-track economy as Sydney and Melbourne surge ahead while other states continue to weaken.

Evidence suggests leasing incentives have begun falling in Melbourne in Sydney, but incentives in other capital cities are still some way off peaking.