Office tenants are being offered higher incentives for leases in a bid to lure them back to major east coast CBDs.
Cushman & Wakefield’s quarterly office Marketbeat, says rents remained steady during the quarter but incentives have jumped, with Sydney recording the most significant increase.
Overall incentives, which can included rent abatements and free office fit-outs, rose substantially as tenants closed down the offices as the global pandemic took hold and many stopped paying rent.
During the June quarter, Sydney CBD prime “gross effective rents” (the flat rent fee that includes rent and all costs associated with ownership) fell 8.6 per cent from $1075 per sq m to $984 per sq m, with the average incentive rising from 21 per cent to 27 per cent quarter-on-quarter.
While weaker rents are reflective of the softer Sydney leasing market during the lockdown period in April and May, Cushman & Wakefield has reported an almost 400 per cent month-on-month increase in leasing inquiries in June.
The report shows that in the Melbourne CBD office market, incentives climbed from 29 per cent to 33 per cent.
Tim Courtnall, head of NSW office leasing at Cushman & Wakefield, said that with the onset of COVID-19 and introduction of lockdown measures, most Sydney tenants seeking office space re-evaluated their timelines.
“However, we have seen a substantial uplift in new leasing inquiry levels in June as the NSW economy reopens,” Mr Courtnall said.
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