Office rents on the rise as tenants ‘trade up’ to bring back workers

The Australian Financial Review2022-09-28

The willingness of corporate tenants to pay more for better-quality office space to entice employees back to the workplace lifted prime rents in the Sydney and Melbourne CBDs for the first time since ...

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It found that more than three quarters of the office re-location decisions in CBD markets over the past 18 months had involved premises commanding the same or higher market rents.According to CBRE, the ability to be closer to end customers, re-configure workplace design to attract and retain talent and match ESG ambitions, were taking precedence over rental considerations.In Sydney, Knight Frank said rental growth has been stronger in the Midtown and Southern precincts, as corporates seek to have their workplaces close to the new Martin Place Sydney Metro, which is due for completion in 2024.Highlighting the strength of demand for brand-new office space in good locations, infrastructure giant Transurban leased 2250 sq m of office space in Poly’s 210 George Street tower due for completion soon, paying $1400 per sq m on a 10-year lease.However, Transurban also locked in a generous 36.5 per cent incentive, a feature of both the Sydney and Melbourne markets, where average incentives are at record highs of 34 and 40 per cent respectively.Looking ahead, Knight Frank expects incentive levels and vacancy rates to start falling in 2023 (aided by lower levels of development completions) and for rents to continue to rise steadily, averaging 2.8 per cent per annum in Melbourne and 3.4 per cent in Sydney through to 2027.A report by Cushman & Wakefield identified a similar ‘trading up’ trend in Brisbane as premium grade rents rose 5.4 per cent over the first nine months of the year to average $910 per sq m, while A-grade rents rose 5 per cent to average $740 per sq m. However, incentives increased to 40 per cent for premium space and 43 per cent for A-grade space.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":2,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2270270193"}