Victoria returns best national office leasing figures: Savills

Stephen TaylorJuly 23, 20130 min read

Victoria has trumped the other states to return the best office leasing figures for the 12 months to June: total square metres reportedly leased are up 36%, according to the latest data from Savills Research.

Victorian office leases reported totalled 366,000 square metres - compared to the NSW figure of 320,000 square metres with Queensland next best at 260,000 square metres leased.

Savills national head of research Tony Crabb says the data reveals 273,403 square metres of leasing activity in the Central Melbourne office market and 93,220 square metres leased in Melbourne's suburban markets.

Most of the central Melbourne leases - about 37% - were in the Docklands precinct with the government the dominant sector in the suburbs at 56%.

While Victoria showed the way on volume, NSW had the most transactions with 147, more than double Victoria’s 70. Queensland also had more reported deals with 110 with transactions in SA, WA and ACT totalling less than 100 between them.

leasingchartjuly24

Savills’ Victorian state leasing directors Nicholas Farley and Mark Rasmussen say the figures show a stronger demand for Victorian office property than might have been expected.

"Obviously the figures can be a bit misleading given the apparent discrepancy between square metres and the number of transactions, but there is plenty of activity in the Victorian office leasing market, and especially in Melbourne,’’ Farley says.

Incentives encouraged tenants into the market, Rasmussen said, adding that the activity was reflective of a market characterised by strong fundamentals.

"Incentives are doing their job, as they always do, of enticing tenants to sign on the bottom line, but there is also no doubt that Melbourne’s office market is fundamentally strong, with the sort of diverse tenancy profile that works to help shield it from the worst of market downturns.

"That’s what makes the Melbourne market so resilient compared with other states such as Perth and Brisbane, where heavy dependency on one sector of the economy, such as mining, can leave those cities vulnerable.’’

The research revealed that 47,800 square metres of the total square metres leased were pre-commitments in the CBD and fringe markets, while the finance and insurance sector was the dominant non-suburban sector totalling 31% of reported leasing activity, or 85,325 square metres. The property and business services sector had the largest number of transactions at 30.

Stephen Taylor

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