Sublease availability in Australia’s five largest cities has decreased by more than 100,000sqm in the year to date, owing mostly to an 81,300sqm decrease in Melbourne as more workers return to the office.
At the end of April, 242,700sqm of supply was available for sublease throughout Sydney, Melbourne, Brisbane, Perth, and Adelaide, according to CBRE Research’s latest Sublease Barometer.
This is a 29.6 per cent decrease from the end-of-2020 total of 344,600sqm, the lowest national level since June 2020, and a decrease from a peak of 428,600sqm in January 2021.
Melbourne was the most active, with a 42 per cent year-to-date decrease from 192,600sqm to 111,300sqm, with sublease availability peaking at 200,000sqm in January 2022.
According to CBRE’s latest Occupier Survey, while hybrid working has become the new normal, full time working from home is set to become increasingly rare.
The study, conducted in March/April, found that the return to the office has already begun, with more than one-third of respondents actively urging workers to return and a further 35 per cent expecting to do so by the end of 2022.
Most respondents now anticipate workers to work from home at least a portion of the time, although the average number of days per week per employee has declined to 1.7 days, down from 1.9 days in October 2020.
This hybrid working scheme has meant empty desks on certain days, with the survey highlighting that unassigned seating is accelerating amongst occupiers across Australia and New Zealand, with 58 per cent of respondents having already implemented it or are expecting they will have this arrangement in the next two years.
CBRE’s Mark Curtain noted strong occupier demand for quality, fitted space was driving sublease transactions.
“With many tenants pursuing pre-fitted space solutions to avoid the cost and inconvenience associated with office fit-out, the national sublease market has enjoyed strong deal activity,” said Mr Curtain, Head of Investor Leasing – Pacific.
“Melbourne has been a standout performer, with total availability dropping by 42% in 2022.
“The significant fall in sublease availability within Melbourne is attributed not only to improved deal activity but also to stock withdrawals,” said Ashley Buller, CBRE Head of Office Leasing, Victoria.
“Many of Melbourne’s largest deals in the past 12 months have taken place in sublease space with near new, high-quality fit-outs on highly tenant-favourable deals.
“We expect the majority of the remaining high-quality sublease space will be leased by year end and the Southern Cross precinct to continue to secure the greatest number of sublease transactions during this time.”
The numbers come as Property Council data shows a consistent and sizable lift in the number of workers heading into CBD offices across the country in May.
The Property Council of Australia’s latest Office Occupancy survey found Adelaide’s occupancy increased from 59 to 71 per cent in May, Canberra jumped from 39 per cent to 60 per cent and Perth and Brisbane both jumped 13 per cent to 63 and 64 per cent respectively.
Sydney and Melbourne occupancy levels also leapt, lifting 13 and 12 per cent respectively to 48 per cent for Melbourne and 55 per cent in Sydney.