August Edition: Q2 Market Update, A Guide To Lease Incentives + Savings Case Studies
Welcome to the latest edition of Tenant CS's Monthly Roundup, where we share company news, articles you may have missed and helpful tips for commercial tenants.
Let’s get started!
Take a read of our latest CBD office leasing snapshot through a unique tenant-centric lens.
Here's a quick snapshot of the current state of play in Sydney, Melbourne and Brisbane:
Sydney
???? Agencies are reporting that Sydney's CBD vacancy rate has increased over the last quarter, now at 11.5%.?However, we believe vacancy figures could be much higher, especially considering the number of subleases available.
???? In a bid to maintain property values, gross Face and Effective rents have continued to increase quarter-on-quarter. However, high incentives that average between 30-39% offset these increases.
???? The Sydney CBD is seeing an uptick in sublease space as key industries, particularly the tech sector, rethink their property requirements. The ongoing struggle to attract staff to the office is also a factor.
Melbourne
???? Melbourne's CBD vacancy rate has increased y-o-y from 11.9% to 15% as tenants move up the quality curve.
???? While Face rents have remained stable, they're being capped by higher incentives, which have risen across all grades.
???? Melbourne CBD's sublease availability is being reported at 2.2% of total stock. We're finding that many larger companies are still looking to sublease their excess space, offering large floorplates and high-quality fit-outs at relatively low rents and on long lease tails.
Brisbane
???? Brisbane's overall CBD vacancy rate has decreased over the last quarter, now sitting at 11.6%.
???? Gross Face and Effective rents have increased Y-o-Y. Significant movement can be seen in Premium and B-Grade assets, triggered by limited supply and inflationary pressures.
???? Sublease space in Brisbane now represents circa 0.3% of total stock - the lowest in the country. This can be attributed to strong leasing activity and the city's limited exposure to financial and tech companies, which are the main drivers of subleasing nationwide.
Lease incentives can vary depending on the market. However, the most common are rent-free periods, rent abatements and fit-out contributions.
Here's a sneak peek into each type:
Rent-free periods
A rent-free period is a time during your lease when you don’t have to pay any rent at all. It usually takes effect at the beginning of a lease (though occasionally it can kick in further down the track) and is indicated as ‘’X months rent-free’’.
Rent abatements
Rent abatement is essentially a reduction in rent spread over a period (or all) of the lease term. In today's market, cash flow is extremely important to landlords. So, they're likely to be more generous with the incentive for tenants requiring less upfront incentive.
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Fit out contribution
A fit-out contribution applies to a tenant’s fit-out. Tenants may negotiate reimbursement for part (or all) of their fit-out costs rather than opting for a rent-free or a rental abatement.
For more information about when to ask for what and how to secure the best possible incentive, read our latest article.
Facing an upcoming sublease expiry, ARQ Group engaged Tenant CS to secure a space that would showcase their brand and encourage a return-to-office.
Key Results
"Tenant CS's expertise and dedication made our office transition a seamless and exciting experience. They secured a cool and techy office space with a high-quality fit-out, generous incentive, early access, and no make-good obligations. Thank you to the Tenant CS team for getting us a great deal and securing an inspiring workplace for our team!"
Tristan Sternson - CEO, ARQ Group
Tenant CS was appointed to help Sefiani decide whether to stay in their current premises or relocate to a new office.
Key Results
Tenant CS was recommended to us – and we’re so glad they were! The team listened carefully to our needs for our next work home and asked lots of smart questions. We were seeking something special to house our market-leading communications agency. An “agency vibe” in a sophisticated building located in the heart of Sydney’s CBD. Not an easy ask, but Tenant CS took on the challenge with enthusiasm and identified a number of great options for us. Our team and clients love the space we have moved into, on the rooftop of a heritage building with our own private expansive terrace overlooking Pitt St. Not only are they true professionals, but we found them a pleasure to work with, expert at helping us navigate the complexities of leases, makegood and landlord’s incentives, and patient with us as they guided us on the journey. We highly recommend Tenant CS.
Robyn Sefiani - President ANZ & Reputation Counsel - Sefiani
Take advantage of the current market
Even in a?tenant's market, many businesses are still negotiating poor leases because they:
At Tenant CS, we're here to ensure tenants get the best deal possible. On average, we improve tenant savings by 180% compared to tenants who attempt negotiations themselves.
Get in touch with our team to learn how to take advantage of the current market conditions: