The tide has turned and tenants are having more influence over landlords as they push for better rents and incentives when signing new lease deals in the global pandemic-hit sublease office sector.
JLL head of research – Australia Andrew Ballantyne said the economic crisis has negatively impacted business confidence. A number of organisations are assessing headcount expectations for the next 12-18 months and releasing excess office space.
“Corporate Australia is the new landlord in town with a sharp increase in sublease availability across the Sydney CBD and Melbourne CBD.,” Mr Ballantyne said.
“The observation in Australia is replicated across developed economies with US sublease availability surpassing the levels recorded in the financial crisis and tech wreck.”
But, demonstrating that there are still leasing deals to be done in the current market, Investa’s leasing team in conjunction with Sarah Ballhausen of SB Property Consulting have finalised a number of signings at Sixty Martin Place and Deutsche Bank Place – at what are said to be at competitive rents.
Global diversified financial services firm Jefferies (Australia) have moved into 958 square metres at the newly-constructed Sixty Martin Place, joining Asia-focused financial services group PAG Australia, Mercury Private Wealth Management, and investment firm Fidelity International.
Investa group executive property Michael Cook said there is no question that business conditions are tough, however, “there is still life in the market”.
“Many businesses are adapting well to this unprecedented environment, some are bunkering down, while others are preparing for a new post-COVID world,” Mr Cook said.
“Leasing office buildings is even more challenging today than in the GFC, but there is always demand for good quality space in well managed buildings.”
The lease deals come amid reports that Investa has engaged agents to look at sell-downs of its interests in some office towers, worth a combined $900 million. That follows Dexus which is also looking to generate cash for new opportunities.