Small is big news in Australia’s office market

An increase in small tenants is creating a changing landscape for building owners in CBD office markets across the country, finds Colliers International’s latest CBD Office Research & Forecast Report.

A rise in demand for sub-0 sqm office space is being driven by growth of start-up and technology businesses, the report finds.

“Average lease enquiry levels in the sub-1,000 sqm category have grown as a percentage of total leases. In 2009, it amounted to 71 per cent of total deals. This has grown consistently to currently account for 83 per cent,” says Nerida Conisbee (pictured), Colliers’ national director of research.

Conisbee expects to see “a wave of part-floor users enter the market over the next two years” as a large number of leases expire. The number is expected to be much higher than single floor and multi floor users over the next two years.

“We therefore expect that it will not just be new tenants entering the market that are after smaller tenancies, but also existing users looking for new space.”

Simon Hunt, Colliers’ managing director of office leasing, says buildings in the Sydney CBD such as Chifley Tower, MLC Centre, 45 Clarence Street, 6-10 O’Connell Street, 25 Bligh Street, 10 Spring Street and 55 Clarence Street have demonstrated the benefits of speculative sub-division and fitouts that cater to smaller tenants.

“Our latest Colliers International Demand Index found 55 per cent of the companies wanting office space in Sydney alone this year have sought less than 0 sqm, and this is being experienced across the board for premium, A and B Grade tenancies,” Hunt explains.

In Melbourne, owners of Prime Grade buildings – including Investa at 120 Collins Street – have split vacant floors into smaller tenancies.

“Owners are recognising where the largest pool of potential tenants lie, and are being proactive in meeting the market,” Hunt concludes.

To read the report click here.