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Smaller tenants more likely to change office in wake of pandemic
By Simon Johanson
Smaller tenants are leading the post-pandemic charge into new offices.
Elevated leasing activity in sub-1000 square metre spaces is a cross-country trend in the first quarter of this year, according to Colliers Australia.
The Botanicca Corporate Park in Cremorne.Credit:
About 67 per cent of non-CBD deal activity was recorded in the sub-1000 sq m category, compared to 54 per cent of deals in the CBD markets, Colliers said. But even that level of small deals in CBD centres is elevated compared to previous periods.
Agent Rob Joyes attributes the heightened activity in the sector to nimbler small-to-medium sized businesses making decisions to move to new premises more quickly than their cumbersome corporate cousins.
“Their workforce is more agile,” he said.
About half of tenants looking to move are downsizing and there is flight to quality to attract staff back to offices and retain talent.
Mr Joyes cited recent transactions in Growthpoint’s 19,500 sq m speculative development at 570 Swan Street and Garda’s 9000 sq m building in Botanicca Corporate Park, where office tenants have leased more than 20,000 sq m in five separate deals.
“In every instance the tenants are relocating from B-grade buildings across fringe locations including St Kilda Road, South Yarra, Kew, Richmond and Hawthorn,” he said.
New tenants signing up in the complex include Bunnings, Fuji Xerox taking 3500 sq m, recruitment firm McArthur moving into 850 sq m, Nuvasive in 700 sq m and accounting firm Wilson Pateras taking a 1000 sq m space.
Rents are ranging from $440 to $460 net per sq m, he said.
Colliers’ national director of research Joanne Henderson said leases signed over the first three months of 2021 were probably planned and negotiated with the impact of COVID uppermost in tenants’ minds.
“Current deal activity should start to give us an idea of any significant locational shifts starting to emerge.”
The pull of the much touted hub-and-spoke model, a CBD office and outlying smaller workplaces, was fading, she said. “Over the last six months it has become apparent that a lasting trend from COVID is likely to be that the spoke is working from home or a flex-space arrangement, and the hub is either a CBD or non-CBD location dependent on the needs of each specific business.”