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Market Overviews

  • NSW
  • QLD
  • VIC
  • ACT
  • WA
  • SA
  • Tenant or Landlord market?

    Landlord

  • Amount of
    supply?

    Adequate

  • Key Tenant
    Driver

    Location

  • Main sector
    driving demand

    Technology / Banking / Professional Services

  • Overall
    sentiment

    Positive

SUBURB / CITY OVERVIEW

Sydney CBD continues to strengthen as a landlords market. Positive face and effective rental growth is being experienced in all grades and locations within the city, as business confidence converts into organic growth and the displacement of up to 380 tenants turns from potential into reality.

If you had to describe your market as an animal, what would it be and why?

An Elephant – big, strong and limited (availability)

What is driving tenant enquiry in your market?

Finance, tech, second tier legal and pharmaceutical

Are there any external factors influencing your market?

Brexit and the US economy continue to be the most talked about factors, but the expectation is that neither will materially impact the Sydney CBD market in a negative way.

What's your prediction for market conditions this time next year?

2017 is the first year of the drought of office space in Sydney’s CBD. With no new supply coming to market next year conditions for tenants will only become more challenging with limited options and tightening deal metrics.

Most significant deals this quarter?

  • JLTA – Grosvenor Place (3,100sqm)
  • IMC – Grosvenor Place (1,996sqm)
  • Korn Ferry – Aurora Place (1,898sqm)
  • Austbrokers – Aurora Place (1,278)
  • Unispace Global – Grosvenor Place (1,036sqm)
  • Alleasing – Aurora Place (1,007sqm)

Daniel Kernaghan

Head of Leasing - NSW
daniel.kernaghan@ap.jll.com
+61 2 9220 8721

Key highlights for this quarter

  • Grosvenor Place committing over 8,000sqm of new tenants
  • Tower 3 of International Towers Sydney reaching practical completion
  • Tenants of 1 Alfred Street served demolition notices
  • Tenant or Landlord market?

    Neutral / Landlord

  • Amount of
    supply?

    Under supplied

  • Key Tenant
    Driver

    Expansion / Location

  • Main sector
    driving demand

    Technology / Professional Services

  • Overall
    sentiment

    Improving / Positive

What are the key highlights for this quarter?

  • DEXUS commitment to the construction of 100 Mount Street, North Sydney. Not in 20 years has North Sydney seen a commercial office development of this size and scale, located in the commercial heart of the business district. 100 Mount Street will set the benchmark for new office development, both in North Sydney and nationally. Demolition of the existing buildings has now commenced, with construction scheduled for completion in 2018.
  • The NSW Governments commitment to the Sydney Metro Rail, in addition to the North West Rail Link (which is already under construction). This has a major impact for the North Shore, allowing commuters from North-West and South-West Sydney ease of public transport accessibility to the North Shore. The NSW Governments announcement of a second train station in North Sydney underpins their commitment to the continued prosperity and growth of the North Shore as a significant Corporate location.
  • A real lack of supply forcing tenant relocation. Supply constraints across the entire North Shore, coupled with inherent tenant growth is resulting in tenant movement. The ability to take additional space in the tenant’s current location is proving impossible in many instances - therefore more tenants are actively seeking relocation opportunities to cater to their businesses medium/long term plans.

What is driving tenant enquiry?

Across North Sydney we are seeking strong enquiry across all size ranges. The NSW Governments Metro Rail project is having a significant impact on market absorption, matched by tenants seeking expansion space and the continuing conversion of secondary (C & D grade) office stock to residential use. Interestingly, we are also seeing a definitive increase in enquiries (particularly sub 500sqm users) looking to North Sydney from the Sydney CBD.

External factors influencing the market

The appetite for residential projects (particularly by overseas investors) in proximity to the CBD has resulted in a number of small and large office buildings receive DA approval for residential use in both North Sydney and St Leonards. Again, the NSW Government’s announcements on improved infrastructure has had substantial influence on the North Shore.

Predictions for market conditions this time next year.

Without doubt, the continued improvement in office market fundamentals will bring substantial and quantifiable benefit to the three key markets of North Sydney, St Leonards and Chatswood. There will be a shortage of good quality options for tenants, which will benefit both prime grade buildings and well-presented secondary buildings. To date in 2016, we have seen effective rental growth in some some market sectors of nearly 5% - we expect this improvement will continue across all key North Shore sub-markets as a result of increasing face rents and marked reductions in incentives.

Significant deals this quarter.

  • Invoice2go commiting to Level 2, 73 Miller Street, North Sydney (1,381 sqm)
  • Trend Micro securing the top floor, Level 15, 1 Pacific Highway, North Sydney (770 sqm), relocating from Macquarie Park
  • Ironfish leasing Level 4, 40 Miller Street, North Sydney (1,200sqm)

Paul Lynch

National Director,
Leasing - NSW
paul.lynch@ap.jll.com
+61 415 909 871

  • Tenant or Landlord market?

    Landlord

  • Amount of
    supply?

    Under supplied

  • Key Tenant
    Driver

    Floorplate

  • Main sector
    driving demand

    Professional Services

  • Overall
    sentiment

    Positive

SUBURB / CITY OVERVIEW

Optimism regarding Walkers Parramatta Square development of over 100,000 sqm of commercial accommodation is the topic of the week, namely Who will occupy and for how much. What will the effect of CBA exit mean for the overall office market.

Enquiry tends to have waned to the mostly smaller local occupiers continuing to move away from landlords considering redevelopment of older stock into residential. Unfortunately, with vacancy recorded at 4.4% the outlook for Larger enquiries is challenging in the near term.

If you had to describe your market as an animal, what would it be and why?

A Bear, quiet capable if it could be coaxed out of its sleepy cave.

What is driving tenant enquiry in your market?

The move away from residential redevelopment. Larger services firm positioning themselves for growth.

Are there any external factors influencing your market?

Residential redevelopment throughout the Sydney market

What’s your prediction for market conditions this time next year?

A complete lack of stock in Parramatta to break record vacancy levels will push Parramatta into a new phase of construction. Tenants will be pushed towards Business Parks spurning new supply in these areas with tighter turn around times on delivery of big floorplates.

New rental levels will be achieved on Premium and A Grade buildings

Most significant deals this quarter?

Australian Unity to 56 Station Street, 1,509 sqm at $380 net

Scott Butler

Associate Director,
Leasing - Parramatta
scott.butler@ap.jll.com
+61 2 9806 2800

Key highlights for this quarter

  • Topping out of UWS Parramatta Square building
  • Market Brief for 55,000 sqm provided by NSW State Govt specifically for Parramatta
  • Demolition of the residual buildings in Parramatta square site to make way for new builds
  • Tenant or Landlord market?

    Landlord

  • Amount of
    supply?

    Adequate

  • Key Tenant
    Driver

    Location

  • Main sector
    driving demand

    Technology / Health / Professional Services

  • Overall
    sentiment

    Positive

What are the key highlights for this quarter?

  • Three major tenants (> 1,000 sqm) relocated into the Macquarie Park office market, taking total new major occupiers in the market to 14 over the last 12 months. Across the metropolitan area 10 major tenant moves were recorded.
  • This is the fourth consecutive quarter where the Macquarie Park office headline vacancy has remained in single digits. Vacancy has tightened marginally and is expected to continue this trend in the short term.
  • Headline vacancy in the Sydney Olympic Park/Rhodes market declined by 1.4 percentage points to 5.8% which was the largest decline in vacancy since 3Q15 (2.9 percentage point decline).

If you had to describe your market as an animal, what would it be and why?

Wallaby, as it’s bounding ahead at the moment.

What is driving tenant enquiry in your market?

Demand for office space in Macquarie Park is currently driven by tenants being displaced from their existing locations due to residential conversion, and the withdrawal of existing office stock. Merger & acquisition activity is also driving demand with companies co-locating from multiple sites across Sydney.

Sydney Olympic Park, Rhodes & Macquarie Park continue to offer large floor plates at affordable rents within the Sydney metropolitan market, and tenants are continuing to capitalise on this.

What's your prediction for market conditions this time next year?

Total vacancy in Macquarie Park is expected to remain in single digits as the supply pipeline remains relatively subdued with construction commencement strongly correlated to pre-commitments. Positive rental growth in the short term will be sustained by limited supply, continued low vacancy, declining incentives and improving leasing demand.

Both Rhodes and Sydney Olympic Park are enjoying low vacancy rates but this will change with the Commonwealth Bank of Australia (CBA) relocating from their current premises. This will leave a significant amount of backfill space and as a result, vacancy could rise further in the medium term in the Sydney Olympic Park market.

Most significant deals this quarter?

  • Boral leasing 4,000sqm at Triniti 2, 39 Delhi Road, North Ryde.
  • Inghams leasing 3,100 sqm at 1 Julius Avenue, North Ryde.
  • AP Facilities leasing 2,000 sqm at 6 Eden Park Drive, Macquarie Park.
  • UBT leasing 3,600 sqm at Stage 1- 10 Herb Elliot Drive, Sydney Olympic Park.
  • NSW Department of Justice Health & Forensic Mental Health leasing 2,300 sqm at Stage 1- 10 Herb Elliot Drive, Sydney Olympic Park.

Denys Bizinger

Regional Director - NSW
denys.bizinger@ap.jll.com
+61 2 9936 5876

  • Tenant or Landlord market?

    Tenant

  • Amount of
    supply?

    Saturated

  • Key Tenant
    Driver

    Tenant Services / Amenities

  • Main sector
    driving demand

    Government

  • Overall
    sentiment

    Struggling

If you had to describe your market as an animal, what would it be and why?

Sloth. Very attractive to tenants but slow!!

What is driving tenant enquiry in your market?

Tenant enquiry is limited, however the enquiry that is active is reflective of the high levels of vacancy and incentives offered across the market, enabling tenants the potential opportunity to reset their business in better quality accommodation at cost effective rates.

Are there any external factors influencing your market?

Not specifically. We continue to see reminisce of the mining sector downturn, while business confidence remains low.

What's your prediction for market conditions this time next year?

The market will continue to be challenging over the next 12 to 18months as the Premium vacancy rate is now at a record high, while the secondary market continues to struggle to get serious traction.

Most significant deals this quarter?

8,900sqm to the State Government in 140 Creek Street.

Adam Barrett

National Director
Head of Leasing - QLD
adam.barrett@ap.jll.com
+61 7 3231 1315

Key highlights for this quarter

  • NAB have committed to 8,000sqm in 259 Queen Street (Ex CBA space)
  • State Government have committed to 8,900sqm in 140 Creek Street.
  • Origin energy are down to a shortlist of 3 options for their 18,000sqm requirement. 180 Ann Street, 310 Ann Street and stay put in CDOP in Milton.
  • Tenant or Landlord market?

    Tenant

  • Amount of
    supply?

    Adequate

  • Key Tenant
    Driver

    Building Grade / Floorplate

  • Main sector
    driving demand

    Technology / Health

  • Overall
    sentiment

    Improving

If you had to describe your market as an animal, what would it be and why?

Horse. The good quality thoroughbreds (Prime and A grade Buildings) are getting all the attention. The old nags and donkeys (old non refurbished buildings) are left out in the back paddocks.

What is driving tenant enquiry in your market?

  • Efficiencies through new workplace design and floor plate configuration.
  • High quality existing fitted out options
  • Tenants relocating from redundant buildings that have been earmarked for development

Are there any external factors influencing your market?

Continuing uncertainty at a political level in the National and global markets.

What's your prediction for market conditions this time next year?

A Grade market will continue to tighten over the next 12 months with large continuous banks of space remaining limited between now and 2018. At least one development will commence in the FV precinct with limited new stock being delivered from 2018 and beyond.

Most significant deals this quarter?

  • CSG 1,482sqm in 15 Green Square Close, Fortitude Valley
  • KBR 2,300sqm in 199 Grey Street, South Brisbane
  • CPB 9,587sqm in HQ, 520 Wickham Street, Fortitude Valley

Gerry Leyden

Associate Director,
Office Leasing, Queensland
gerry.leyden@ap.jll.com
T: +61 7 3231 1348
M: 0402 792 238
F: +61 7 3231 1314

Key highlights for this quarter

  • Origin Energy continuing their QLD accommodation process (15,000-17,000sqm)
  • Construction commenced on new building at BTP Northshore, Hamilton (Alceon & Graystone JV)
  • CBIC owned 41 O’Connell tce, Bowen Hills close to being fully leased with two small tenancies remaining following QLD Health’s 89% occupancy.
  • Tenant or Landlord market?

    Neutral

  • Amount of
    supply?

    Adequate

  • Key Tenant
    Driver

    Location

  • Main sector
    driving demand

    Banking / Professional Services

  • Overall
    sentiment

    Positive

If you had to describe your market as an animal, what would it be and why?

Greyhound. Fast and nimble, but likely to run out of steam in 12 months.

What is driving tenant enquiry in your market?

Organic growth from smaller businesses, consolidation from larger ones and centralisation

Are there any external factors influencing your market?

Nothing abnormal

What's your prediction for market conditions this time next year?

Equilibrium market whereby both tenant and landlord have opportunities to transact. Effective rental growth will be stronger for landlords with renewing tenants, than those transactions required to attract new building tenants.

Most significant deals this quarter?

Tenant New Address Area Committed (sqm)
Salmat 485 Latrobe Street 10,620
Minter Ellison 447 Collins Street 10,500
Maurice Blackburn 380 Latrobe Street 8,164
ACCC 2 Lonsdale Street 5,700
APA Group 60 City Road 2,669

Stuart Colquhoun

Head of Leasing - Victoria
stuart.colquhoun@ap.jll.com
+61 3 9672 6531

Key highlights for this quarter

  • 477 Collins St will seek to add to its Deloitte pre-commitment
  • CBUS’s 447 Collins Street scheme adds Minter Ellison to its King Wood Mallesons tenancy mix
  • Charter Hall secures Wesley Place development approval and appoints JLL to undertake project leasing role.
  • Tenant or Landlord market?

    Landlord

  • Amount of
    supply?

    Under supplied

  • Key Tenant
    Driver

    Building Grade

  • Main sector
    driving demand

    Technology / Professional Services / Project

  • Overall
    sentiment

    Improving

If you had to describe your market as an animal, what would it be and why?

Salmon – working its way up stream but faces challenges along the way.

What is driving tenant enquiry in your market?

Whilst market conditions prevail, occupiers strive to improve their accommodation standard and seek to achieve greater efficiencies where available.

Short term project users are becoming apparent for quality fitted options, which is enabling occupiers with lease legacy to minimise lease exposure.

Are there any external factors influencing your market?

A topical item relevant to the city fringe market relates to the future Melbourne Metro Railway Link which provides a new 9 kilometre rail link between Melbourne’s inner south and north and provides 5 new train stations. The benefit to markets within the new stations (St Kilda Road, Carlton & Parkville) on completion of the project will be of great benefit to commercial buildings within walking distance of the newly established stations.

What's your prediction for market conditions this time next year?

With limited stock availability in A-Grade markets, rents are anticipated to steadily rise for this sector of the market. Pressure would therefore reasonably expect to flow through to incentives reducing.

New office projects to ideally follow to support a pent up demand.

Most significant deals this quarter?

  • Monash University have now signed the Lease for approximately 8,000 sq.m at 553 St Kilda Road;
  • Save the Children leased 2,900 sq.m at 33 Lincoln Square South, Carlton
  • Yamaha Music Australia committed to approximately 2,000 in Market St, South Melbourne
  • Dixon Hospitality understood to have committed to approx. 1200 sq.m at 616 St Kilda Road

Richard Norman

Associate Director - Victoria
richard.norman@ap.jll.com
+61 3 9672 6636

Key highlights for this quarter

  • Rising rents;
  • Tenant demand remains steady;
  • A number of new office projects throughout city fringe markets are proposed;
  • Tenant or Landlord market?

    Landlord

  • Amount of
    supply?

    Saturated / Under supplied

  • Key Tenant
    Driver

    Fit Out / Existing

  • Main sector
    driving demand

    Professional Services

  • Overall
    sentiment

    Improving

SUBURB / CITY OVERVIEW

Demand in the second quarter of the year slowed considerably as we moved into election mode where traditionally business leaders adopt a wait, watch and see mentality. This year was no different especially given how closely run the campaign was. This combined with a normally slow end of financial year period meant that little or no major transactions were reported.

With this now behind us we are expecting a big pick up in deals moving toward the tail end of the year and expect Q3, 2016 to have over 50% of this years leasing transactions squashed into it.,

If you had to describe your market as an animal, what would it be and why?

This year the Melbourne suburban market can best be described as a bear. We have been in hibernation for nearly 6 months. Now having been through the worst of winter, so to speak, we believe the beast will awaken for a strong second half of the year.

What is driving tenant enquiry in your market?

The past three months has been dominated by infrastructure and project groups looking to secure fitted space for major projects on shorter term leases. Groups like Fulton Hogan, John Holland & Lend Lease to name a few have all been actively in the market.

We have also seen considerable demand increase for fitted A grade space in the Inner East with Buildings like Build 8, 658 Church Street and 5 Burwood Road now being mostly leased. These deals have seen new benchmarks hit for leasing in terms of Face Rentals.

Are there any external factors influencing your market?

The overall economy is having some dampening effect on the market and the increase in direct and subleasing opportunities in the south east is creating more competition for the limited amount of demand.

What's your prediction for market conditions this time next year?

The two speed market will continue this year with limited demand for the outer east market and strong demand in the inner east and fringe markets. Rents will continue to grow where the demand is high and stock levels continue to tighten.

Most significant deals this quarter?

  • Transurban take 1,000 square metres at Nexus Court, Mulgrave
  • SPC leased 1,600 square metres at 678 Victoria Street, Richmond
  • Design Works take 1,800 square metres at Building 8, 658 Church Street, Richmond

Josh Tebb

Director, Office Leasing,
Glen Waverley
Joshua.Tebb@ap.jll.com
+61 03 9565 6617

  • Tenant or Landlord market?

    Tenant

  • Amount of
    supply?

    Adequate

  • Key Tenant
    Driver

    Building Grade

  • Main sector
    driving demand

    Technology / Government - Local and Commonwealth

  • Overall
    sentiment

    Improving

If you had to describe your market as an animal, what would it be and why?

An Ox – A fairly nondescript looking animal, an ox can actually pull and carry up to 900kg, or 1.5 times its body weight. Like an Ox, the Canberra market looks fairly unremarkable and sluggish on the surface. Drill deeper however, and it has the second tightest prime vacancy in the country, and it more than pulls its weight for diversified property funds!

What is driving tenant enquiry in your market?

Growth in the Private Sector continues to drive net absorption in the ACT. In particular, growth and contraction of Defence-affiliated service firms, IT, Recruitment and Legal.

Are there any external factors influencing your market?

The Commonwealth Government’s occupation of space plays a critical role to the health and stability of the Canberra Commercial Office Market. A double election year (both at a Federal and Local level) has impacted occupier confidence. Furthermore, the a Change of Government could create “Machinery-of-Government” churn that generates enquiry. Department of Finance continues to have a major impact on leasing activity within the ACT, mandating a “cost-benefit” analysis be undertaken prior to leasing decisions being made.

What's your prediction for market conditions this time next year?

Largely speaking, there is a growing sentiment of positivity in the ACT and this will continue throughout the remainder of 2016 and into 2017. Stock withdrawal for either residential or hotel development looks set to intensify, with limited new developments in the pipeline. Solid take-up of space will force the vacancy figure southwards, increasing effective rents and quality opportunities for tenants in the A-grade cohort of the market will dwindle.

Most significant deals this quarter?

Tenant New Address Area Committed (sqm)
Barnardos Australia Ground Floor, 26 Thynne Street 1,670
Department of Immigration and Border Protection 2 Constitution Avenue 9,913
Australian Commission for Law Enforcement Integrity (ACLEI) Level 1, 64 Northbourne Avenue 1,265

Andrew Balzanelli

Managing Director
Sales and Leasing - ACT
andrew.balzanelli@ap.jll.com
+61 2 6274 9818

Key highlights for this quarter

  • The uncertainty surrounding the Federal Political Landscape
  • International Capital continuing to flow into/search for opportunities to purchase real estate in the ACT
  • Building withdrawals, weak development pipeline and tenant expansionary moves continuing to drive the vacancy figure southwards
  • Tenant or Landlord market?

    Tenant

  • Amount of
    supply?

    Saturated

  • Key Tenant
    Driver

    Location

  • Main sector
    driving demand

    Professional Services

  • Overall
    sentiment

    Struggling

SUBURB / CITY OVERVIEW

Vacancy remains high in the CBD, and has increased further in the West Perth Market. This has resulted in leasing incentives increasing and rents softening further. Opportunities to upgrade and favourable conditions for tenants are driving tenant enquiry and leasing activity.

If you had to describe your market as an animal, what would it be and why?

A Stingray – Travelling along the bottom at the moment, but is tough and aggressive in the right conditions.

What is driving tenant enquiry in your market?

  • Lease expiry remains the largest driver of tenant demand, with tenants looking to upgrade their facilities or improve their location.
  • New fitouts can be funded by incentives.
  • Landlords are offering large incentives to encourage sitting tenants to re-commit.
  • Tenant interest is focused around existing partitioned and furnished premises, with a market incentive.
  • Lessors continue to build speculative fitouts in an attempt to compete with the high availability of partitioned sublease space.
  • A steady amount of interest from suburban tenants looking to relocate into the CBD given the competitive terms and quality space available.

Are there any external factors influencing your market?

  • Demand for commodities and the impact on iron ore and oil pricing.
  • The changing exchange rate.

What's your prediction for market conditions this time next year?

  • With vacancy expected to peak during 2016 at approximately 25% and no new developments in the short term, we anticipate a stabilising market.
  • Sublease space will continue to diminish via expiry and/or withdrawals.
  • Lower Australian dollar and hopefully increased demand may see renewed exploration and activity in the resources industry.
  • Continued improvement in enquiry levels driven by lease expiry and favourable market conditions for tenants.

Most significant deals this quarter?

  • Jera sub-leasing 1,692 sqm at 125 St Georges Tce
  • Bentleys leasing 933sqm at 214-216 St Georges Tce
  • 303 Mullen Low leasing 660 sqm at 1 Forrest Place

Nick Van Helden

Regional Director
Head of Leasing - WA
nick.vanhelden@ap.jll.com
+61 8 9483 8423

Key highlights for this quarter

  • Vacancy remained relatively unchanged during the second quarter.
  • Increasing activity from tenants relocating from suburban locations to the CBD.
  • No new additions to supply over the quarter, with construction progressing on the Capital Square Development
  • Tenant or Landlord market?

    Tenant

  • Amount of
    supply?

    Adequate

  • Key Tenant
    Driver

    Tenant Services / Amenities

  • Main sector
    driving demand

    Technology

  • Overall
    sentiment

    Struggling

SUBURB / CITY OVERVIEW

Enquiry slowed noticeably through the latter stages of the second quarter. Transactions are taking longer to conclude with tenants assessing multiple options in greater detail than ever before.

If you had to describe your market as an animal, what would it be and why?

A hibernating bear.

What is driving tenant enquiry in your market?

Smaller tenants continue to drive enquiry with the vast majority of tenants in the market seeking tenancies smaller than 500 square metres. IT and technology businesses have been most active with not-for-profit businesses most active in the suburban markets.

The relatively high incentives available in the CBD are drawing tenants away from the suburbs and into the city. The trend towards consolidation and centralisation looks set to continue with many occupiers demanding greater efficiency and a more comprehensive offering from their leased property.

Are there any external factors influencing your market?

Broader economic conditions seem to be having a dampening effect on South Australian business. Confidence is fragile, which means investment decisions are being postponed or cancelled.

What's your prediction for market conditions this time next year?

Any significant new development is unlikely without major pre-commitment which means supply should remain subdued. Vacancy should stabilise in the Prime market but will likely remain high in the secondary market as tenants gravitate towards newer buildings. Demand will recover, but it will be a slow recovery.

Most significant deals this quarter?

  • Bupa’s commitment to 1,775 metres at 50 Flinders Street, Adelaide
  • Rivergum Homes commitment to 475 square metres at 64 Greenhill Road, Wayville

Tom Budarick

Head of Leasing - SA
tom.budarick@ap.jll.com
+61 8 8233 8898

Key highlights for this quarter

  • Bupa committed to 1,775 square metres at 50 Flinders Street, Adelaide.
  • A positive net absorption figure for the quarter. Although only small, the good news is welcome.
  • A number of CBD assets changed hands including 30 Flinders Street, 30 Currie Street and 19 Grenfell Street.