Melbourne and Sydney have contributed to a slight rise in Australia’s national supply of office sublease space in early 2023, following a cost containment push in the Information, Media & Technology (IMT) sector.
CBRE’s latest Sublease Barometer shows the volumes of national sublease space has risen by 3% this year, to reach 255,000sqm, with the IMT sector being the primary driver of the overall 7,000sqm increase.
CBRE’s Australian Head of Office Research Tom Broderick noted, “The IMT sector has recorded the largest increase in sublease availability over the past 12 months, partly due to recent cost cutting in the sector, particularly as it relates to headcount reductions. IMT firms have also been more likely to adopt hybrid working and therefore may still be offloading excess space.”
In contrast, CBRE’s data highlights that the finance and insurance sector has been relatively stable from a sublease perspective over the past 12 months, while professional services firms have accounted for a smaller proportion of sublease availability – particularly law firms, which are offering 40% less space.
CBRE’s Pacific Head of Office Leasing Mark Curtain said the total stock of national sublease space remained 40% below the early 2021 peak, with the only slight, city-based increases occurring in Sydney and Melbourne.
“These markets are more exposed to the financial and tech sectors, which have been experiencing cost containment pressures in the current environment. Australia’s smaller CBD markets have meanwhile recorded higher physical occupancy levels throughout 2022, which has put less pressure on tenants to offload space,” Mr Curtain said.
Melbourne’s CBD has recorded the largest increase in sublease availability this year to 122,000sqm, representing 2.4% of the city’s total office stock, up from 2.2% a year ago but still well below the 4.0%, 171,000sqm peak in late 2020. The finance sector accounts for the most sublease space, totaling 42,000 sqm.
The Sydney CBD currently has 104,000sqm of sublease space available – representing 2.0% of the city’s office stock, well down on the late 2020 peak of 171,000sqm (which was 3.4% of total stock). Availability has grown by just 1,400sqm in 2023, with the finance and technology sectors having the most stock on the market (a combined total of 53,000sqm of space).
Brisbane’s CBD has recorded the largest drop in sublease availability over the past 12 months, from 0.9% to 0.5% of total office stock.