Sydney Metro Q107.05.2012
How would you characterise your market at the moment?
The first quarter in the Sydney Metro market can be described as ‘patchy’. Enquiry levels (medium to large) have been quite strong. However, it is still taking a long time to negotiate lease deals and obtain necessary approvals for a deal to proceed.
Are there any trends you are noticing among the tenants you are talking to?
The trend is still very much the same as 2011 – limited funding available for new fit outs and relocation. Preference is still to take advantage of office space with a good existing fit out. Tenants are trying to keep relocations a cost-neutral exercise.
What do you think will be the biggest influence on your market in Q2?
The biggest influence in Q2 will be the lack of supply and with several larger enquiries expected to conclude deals in Q2, A-Grade supply can be expected to contract even further. The positive side of this situation is that it may encourage/provide confidence for speculative construction.
What will rents and incentives do in Q2?
A-Grade rent will likely remain at a similar level. However, the southward trend with incentives will continue as supply reduces. We are not expecting any new commercial projects to commence in Q2, 2012.
What should landlords do to adapt to these market conditions?
With B-Grade vacancies quite high and increasing, landlords of these assets need to make sure their building is always presented at its best. This includes everything, from the landscape to internal presentation – as in many cases, first impressions are lasting impressions.
Director, Office Leasing, New South Wales
Recent Leasing Deals
Market Balance, as at March 2012
Download a PDF of the Sydney Metro Q1 Market Overview