Demand for office space intensifies: Colliers

Melbourne’s office market has continued to tighten.

Demand for office space across major Australian markets remains strong this year, despite some tightening and a declining vacancy rate, according to Colliers International.

The firm says the office market remains buoyant, with a total of 416 deals and 336,062sqm transacted in the six months to July.

This was a 6% increase on the total number of deals and a 14% increase on the area transacted in the same period last year.

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Colliers International national director office leasing, Cameron Williams, says that although the markets are tightening in the Melbourne, Brisbane and Sydney CBDs, there is still an uplift in demand for office space, which remains strong compared to other quarters.

“We’re entering a new market landscape compared to what we have experienced during the past few years, with limited stock availability and demand remaining strong,” he says.

Stock withdrawals in Sydney’s CBD slowed demand for office space during the first half of 2017 but underlying demand remains robust, with a rise in the number of inquiries for office space more than 3000sqm.

Williams says the number of national inquiries for all market segments, including less than 1000sqm, between 1000sqm t0 2999sqm and more than 3000sqm, has experienced an increase when compared to the past four years.

We’re entering a new market landscape compared to what we have experienced during the past few years, with limited stock availability and demand remaining strong

“Year to date we have seen a slight drop in the area inquired for in the 3000sqm-plus segment,” he says. “That said, the amount of area is still more than the first half of 2015 and 2014, and even though more businesses have inquired for office space more than 3000sqm, the reason the amount of area is down on last year is likely in relation to them seeking space efficiencies due to changing workplace trends.”

Williams says demand for metro office markets in Melbourne and Sydney has also increased from last year, saying that this could be due to limited CBD options, the need to decentralise, or the growing popularity of city-fringe locations.

Colliers International’s Luke Dutton, director for tenant advisory, said that in Sydney and Melbourne, where occupancy costs were rising, tenants were increasingly seeking to improve efficiencies within their workplace.

“Tenants are embracing this as a means of combating higher occupancy costs, with the target outcome to reduce their overall footprint,” he said.

This article originally appeared on www.theaustralian.com.au/property.