Office vacancies on the rise

Office vacancy rates in Australia’s capital cities are set to rise as new research reveals demand is slackening during harsh economic times.

Office vacancy rates in Australia’s capital cities are set to rise as new research reveals demand is slackening during harsh economic times.

New research from Jones Lang LaSalle shows the amount of vacant floor space in the Melbourne CBD has tripled in the last three months from 3500 square metres in June to nearly 12,000 in September.

The figures also show vacant sublease space accounts for 0.1% of CBD office space in June, and 0.3% last month.

While the research pertains only to Melbourne, Jones Lang LaSalle leasing director told The Age the number of vacancies will continue to rise.

“The leasing market was very different back when these (pre-commitment) deals were done, and it’s now likely to prove much harder to find tenants willing to take over the space that is being vacated,” he says.

CB Richard Ellis senior director Hamish Sutherland says the vacancies will also spread to Sydney.

“Melbourne isn’t home to the headquarters of the major investment banks and property funds that are feeling the credit crunch and downturn the most,” he says.

“[Melbourne] is far less likely to see large, contiguous blocks of space enter the market, meaning subleased space should be competing with the smaller end of the leasing market.”