Melbourne, Adelaide lead tepid demand for office space in Q3
Demand for CBD office space nationally grew slightly in the third quarter of 2015, with Melbourne and Adelaide leading the way, according to Colliers International’s Q3 Office Demand Index.
It showed a small increase of one percent in national office enquiry to 534,226 square metres in the third quarter from 527,226 square metres in the previous quarter.
Enquiries for 3,000 square metre-plus office space, however, rose 20% over the previous quarter.
Melbourne saw its largest demand in one quarter since the beginning of 2009, with a total of 239,594 square metres, 59% more than the same period last year.
“We are seeing the evolution of the modern workplace, including the growing trend towards flexible and activity-based working, acting as a key driver for tenant demand in Melbourne,” said Simon Hunt, Colliers International managing director of Office Leasing.
He said business confidence was also on the rise.
Adelaide saw an increase of 25% to 50,704 square metre in the third quarter compared with the second and a 2% rise year-on-year.
“We expect Q4 this year to bring a significant amount of tenant decision in Adelaide, with the likes of NEC (3,000 square metres), the Department of Social Services (3,500 square metres) and the Administrative Appeals Tribunal (1700 square metres) all in the market to relocate."
One of the most active components of the market was the sub-500 square metres sector, he added, with most businesses trying to increase workplace efficiency. The majority of tenants in the current market are working on an employment density of between 10-12 square metre per person.
Enquiries in Sydney, however, fell a sharp 15% in the third quarter to 173,150 square metres from the second. This figure was still well above the average demand for Sydney since 2009.
Simon Crouch, Colliers International national director of Tenant Representation, said IT companies continued to lead the demand for office space.
“We have seen a shift by these companies, in focussing on Sydney CBD A Grade and CBD Fringe assets, driven by the need to attract the best talent, superior public transport and amenity,” Crouch said.