Sub-leasing slowly dying due to co-working boom

But with the growth of co-working spaces alongside serviced offices and small or turnkey suites, there is only about 100,000sq m of sub-lease spaces available across all Australian CBD markets, with a only 29,500sq m on offer between Sydney and Melbourne, Investa’s January 2019 Office Market Outlook said.
Sub-lease vacancy across Australia’s major CBD markets has declined by 60 per cent in the past three years.

But while traditional sub-lease spaces are lacking, there are plenty of untenanted co-working spaces which are not advertised or measured.

Investa said the reporting of office market data has lagged the transition in office leasing trends. Office vacancy is understated because spare spaces held by co-working providers are considered “leased” as long as an existing head lease is in place.

“Our research shows that sub-lease vacancy is an outdated and inadequate measure of flexible office market conditions. We propose that improved reporting of flexible office utilisation would provide a clearer picture of market conditions,” Investa head of research and strategy David Cannington said.

“There is no doubt that the drivers of this shift towards flexible office markets will continue to support further long-term growth.

“Despite this, landlords, tenants and policy makers need access to reliable market data on flexible office activity as we move through the office market cycle.”