South Melbourne vacancies decrease sharply as tenants vie for space
South Melbourne is experiencing a tightening in the office leasing space owing to strong tenant demand for office space, says real estate firm Cushman & Wakefield.
The trend is similar to that of Southbank, which in 2016 saw vacancies drop to 4.1 percent, the lowest levels since 2011 (PCA Office Market Report, Feb. 2017).
During a number of recent leasing transactions completed in the South Melbourne area, Cushman & Wakefield’s Melbourne office leasing team has witnessed unprecedented demand amongst tenants for limited space, particularly in and around the South Melbourne Market Precinct.
Cushman & Wakefield has recently completed a number of leasing transactions including:
Level 1, 280-286 Coventry Street – 725 sqm leased to sales performance firm, Maverick Rose. The leasing campaign was managed by Grant Tinker and Edward Maas.
5 Union Street South Melbourne – 260 sqm at $351 per sqm leased to independent advertising agency, Zoo Group. The leasing agent was Tristan Parker.
Suites 1.14 and 3.07, 87 Gladstone Street – 52 sqm and 53 sqm spaces leased to anti-bullying and education group, Project Rockit and Architects, de.arch, respectively. Both were leased at approx. $500 per sqm also managed by Tristan Parker.
Cushman & Wakefield’s Edward Maas said the market was very tightly held, with existing tenants were rolling on lease options, essentially locking out potential tenants.
“We have seen Southbank experience a sharp increase in vacancies over the past 12 months, falling to 4.1% at end of 2016 from 9.3% at the end of 2015. This has been compounded by the strongest net absorption in five years over 2016, and ongoing stock reduction, which is impacting leasing opportunities in the broader South Melbourne area.”
Matt Rose, partner at ZOO Group — one of the new tenants in South Melbourne — said South Melbourne has established itself as a strong hub for businesses in the creative industries, but conventional spaces in the area are largely locked up.
“As a rapidly emerging creative agency, we were seeking access to the same ecosystem and amenities as creative hubs like Richmond or Cremorne and South Melbourne continues to offer a fantastic location for staff and clients. With little on offer in the area, we moved very quickly on an old furniture store and re-designed the space to accommodate the flexibility a business like ours needs.”