News release

CBD office markets record positive net absorption in Q2

The length of Sydney’s lockdown will determine the impact on office leasing activity over the second half of 2021

July 14, 2021

AUSTRALIA, 14 JULY 2021 – JLL Research has released 2Q21 statistics on national office markets. The figures showed positive net absorption of 16,000 sqm was recorded over 2Q21. Five of the six monitored CBD office markets recorded positive net absorption in Q2.

The national CBD office market vacancy rate increased marginally to 14.0% as uncommitted and backfill space became available from new and refurbished office developments.

JLL Head of Research – Australia, Andrew Ballantyne said, “Flash economic indicators and employment data are well ahead of market expectations and point towards a strong rebound in the Australian economy. Leasing activity improved over Q2 and we saw some organisations withdraw sublease space.”

“Rome wasn’t built in a day and this positive quarterly net absorption print is an important step towards a more sustained market recovery. However, the Sydney lockdown has the potential to delay occupier decision-making in the short-term,” said Mr Ballantyne.

The Melbourne CBD recorded positive net absorption of 6,600 sqm and a minor reduction in vacancy to 14.1% over 2Q21. The positive result in the Melbourne CBD was not at the expense of the metropolitan office markets. The Melbourne Fringe (11,700 sqm) and Melbourne South East suburbs (+7,900 sqm) both recorded positive net absorption over Q2. 

JLL Head of Leasing – Australia, Tim O’Connor said, “In Victoria, the public sector has increased headcount and this has flowed through to increased leasing activity with a number of larger leasing transactions occurring over the quarter. The private sector is taking a more cautious approach to space requirements with the bulk of leasing enquiry coming from small to mid-sized organisations.”

The Sydney CBD recorded 1,200 sqm of net absorption over the quarter. The completion of Brookfield Place and associated backfill space pushed vacancy higher to 13.2% in 2Q21. 

Mr O’Connor said, “Prior to the Sydney lockdown, we started to see a significant uplift in leasing activity from organisations in the 1,000 sqm to 7,000 sqm size cohort. Furthermore, the financial services sector was in expansion mode with MA Financial Group and Jarden significantly increasing their occupational footprint over Q2.”

“Another positive sign we saw in the Sydney CBD was the withdrawal of sublease space. While the hybrid-working model will be adopted by a number of organisations, the pre-lockdown return to worker figures some companies recorded were ahead of expectations resulting in the withdrawal (wholly or partially) of sublease space,” said Mr O’Connor.

The Perth CBD recorded the strongest quarterly net absorption result across CBD office markets over 2Q21 (+8,500 sqm). The Perth CBD vacancy rate tightened by 0.5 percentage points to 19.7% over the quarter.

Mr O’Connor said, “The sharp increase in commodity prices has improved mining sector revenue and profitability. An increase in leasing enquiry from the broader resource sector would be an additional ingredient in the demand-side of the equation in the Perth CBD.”

Canberra recorded a fourth successive quarter of net absorption in 2Q21 (+4,200 sqm) and 33,500 sqm over the 2020/21 financial year. The Canberra vacancy rate tightened to a 12-year low of 7.0%. The prime grade is even lower at a very tight 4.1%.

Mr Ballantyne said, “The most recent Federal Budget confirmed that most agencies will increase headcount over the 2021/22 financial year. Headcount expansion is flowing through to new enquiry with a number of expansionary public sector requirements finalised over the quarter.”

The Adelaide CBD recorded 1,800 sqm of net absorption in 2Q21. The headline vacancy rate was unchanged at 16.9% over the quarter.

The Brisbane CBD was the only monitored CBD office market to record negative net absorption in Q2 (-6,400 sqm) as the result of one major consolidation (~13,000 sqm). Outside of this contraction, the Brisbane CBD would have recorded positive net absorption.

Mr O’Connor said, “The Brisbane CBD has one of the highest workplace re-entry rates across major office markets. As a result, sublease availability has been less pronounced than the level recorded in Melbourne and Sydney.”

The Brisbane Near City market continued to recover with net absorption of 9,400 sqm and a reduction in vacancy to 17.2% in 2Q21.

Mr O’Connor said, “The length of the Sydney lockdown will determine the impact on office leasing activity. However, the momentum we saw in labour markets and leasing enquiry over Q2 showed that organisations are planning for expansion in 2022 and beyond.”

“The most active industry sectors over the next 18 months are expected to be public administration, professional services, technology and healthcare. The expansion of the technology sector is not solely related to those firms, but a diverse range of organisations implementing new technologies to improve productivity or mitigate cyber security risks,” concluded Mr O’Connor.


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