Hitting the suite spot
Brisbane boasts Australia’s largest market for speculative office suites – with nearly triple the space of Sydney and more than five times Melbourne’s offering – according to Knight Frank’s new national report.
Suite Spot is Knight Frank’s inaugural national report for speculative and pre-speculative fitted office suites.
More than 27,000 sqm of spec space is on the books in Brisbane, compared to Sydney’s 9,300 sqm and Melbourne’s circa 5,000 sqm.
Jamie Nason, Knight Frank’s director of office leasing in Queensland, says speculative suites are increasingly popular with small-to-medium businesses.
“We originally saw the spec suite trend emerge in Brisbane as high vacancy levels meant landlords had to try different things to attract tenants,” he says.
“They started fitting out their space with polished concrete floors, exposed services, funky furniture and lighting to stand out from the crowd. The fitted-out space appealed to tenants as they were able to take on a flexible lease without needing to spend a considerable amount of money on fitting out the space.”
Knight Frank’s report finds that landlords undertaking speculative refurbishments in their buildings are “outperforming their competitors, with spec suites remaining on the market for less time,” Nason adds.
In Sydney, the 9,300 sqm of spec space is predominantly in the B-grade market, although the amount of A-grade space is growing. Banking, finance and insurance are the dominant spec suite tenants, collectively accounting for 42 per cent of the NSW market.
In Melbourne, a “generational shift” in working habits is driving demand for smaller suites. More than 5,000 sqm of space is available in the CBD, and Knight Frank finds buildings with spec suite space on offer remain on the market for less time.
In Perth, more than 11,000 sqm of spec suite space is available. A-grade building space dominates this Perth market, and there is “particular” interest for tenancies ranging from 100 to 300 sqm.
And with Canberra’s high office vacancy rate, owners are subdividing larger spaces and completing speculative refurbishments to stand out from competitors.
David Howson, Knight Frank’s head of office leasing for Australia, says spec suites typically vary from 60 to 1,000 sqm landlords.
“We are now seeing landlords undertake speculative refurbishments in all asset grades across the country.
“However, our clients are having the most success with space ranging from 1 to 2 sqm, as it suits start-ups that may have outgrown co-working but are not yet at the stage where they are willing to take on significant amounts of space and the cost that can be associated with converting the space.”
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