The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
LESS THAN 30 DAYS UNTIL OUR FLAGSHIP CONFERENCE 29-31 JULY, GOLD COAST
4 WEEKS UNTIL OUR FLAGSHIP CONFERENCE 29-31 JULY, GOLD COAST
SECURE YOUR SPOTDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
print
Print
OtherStaff WriterMon 27 Mar 17

Government Drives 128% CBD Leasing Surge

Melbourne-CBD-Night_620x380-1

The latest research from Savills revealed preliminary office leasing figures for Melbourne’s CBD show a massive rise of circa 128 per cent over the 12 months to March, with the Government and Community sector taking 38 per cent of the space.

Around 569,810 square metres of leasing activity was recorded in the Central Melbourne office market in the last 12 months, with population growth and infrastructure projects marked as important market drivers.

"This is up 128 per cent on the 250,000 square metres leased in the 12 months prior, and also up on the five year average of 269,943 square metres, so these are quite remarkable figures in anybody’s language,’’ Savills Associate Director of Research Monica Mondkar said.

The Government & Community sector was the dominant sector leasing 224,906 square metres, 83 per cent of which was Prime Grade. Direct leases totalled 77,868 square metres, while 81,000 square metres was pre-committed.

Public administration was the largest sub-sector accounting for 65 per cent of the space taken-up under the Government & Community sector, followed by Education at 23 per cent.

Ms Mondkar said Property & Business Services was the next largest leasing sector at 28 per cent followed by IT & Communication at 15 per cent and Finance and Insurance at 13 per cent.

Director Office Leasing Phil Cullity said there were a number of factors behind the massive rise in leasing including the renewal of government leases, consolidation of government departments, population growth, government infrastructure projects, staff retention and recruitment requirements, and efficiency gains.

He said sound advice to government departments on the full planning and management of individual leasing requirements had also been an important factor.

"Overall governments – state and federal – have underpinned the massive take up with population growth also an important part of the equation.

"Last year net absorption was 117,000 square metres which smashed the 10 year, 86,000 square metre, average and all indications are that we are in for another 12 months like that.

"It’s then really no surprise that developers are pushing ahead with new buildings especially with economic rents being achieved,’’ Mr Cullity said.

Mr Cullity said during the GFC years of 2008/2009/2010 government departments had not upgraded their space because there were fewer options to go to.

"A lot of government leases have recently come up for renewal at the same time and they are well overdue to move into better quality, more efficient space.

"The State Government, in particular, has been proactive in taking advantage of market conditions, locking in rents and incentives, before rents begin to rise.

"Governments now realise that, as they are in competition with the private sector for the best young talent, they must offer a similar level of accommodation and that includes the latest building services including end of trip facilities, meeting facilities, amenities and access to transport, cafes,’’ Mr Cullity said.

He said government tenants were also increasingly mindful of the need for more efficient buildings in reducing costs.

The Importance Of Infrastructure Projects
Mr Cullity said the State Government’s current infrastructure program including level crossing removals, the Metro Tunnel and the Western Distributor, had also been important in driving the overall leasing market.

"This is not so much about government leases. While there have been some, there have been many corporates leasing additional space associated with these projects and this will have an impact on the market over the long term,’’ Mr Cullity said.

IndustrialAustraliaFinanceReal EstatePolicyPolicy
AUTHOR
Staff Writer
"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
More articles by this author
ADVERTISEMENT
TOP STORIES
Exclusive

Tapping the Bunnings ‘Halo Effect’

Taryn Paris
5 Min
Exclusive

‘Construction Not a Scale Game’: Hutchinson

Phil Bartsch
9 Min
Nation's build-to-rent project Charlie Parker in Sydney's Parramatta where more projects are being located and built outside the CBD.
Exclusive

Foreign Capital Still Dominates BtR but Things are Changing

Marisa Wikramanayake
7 Min
Exclusive

Fortis Reveals Plans for Coveted Bowen Terrace Site

Taryn Paris
4 Min
Exclusive

Accor Deputy Delivers Verdict on Brisbane Games Hotel Shortfall

Phil Bartsch
6 Min
View All >
Wynnum Masterplan hero
Development

Masterplan Revealed for Brisbane Bayside Super-Site

Phil Bartsch
Residential

Consolidated Reveals Next Riverfront Play in $64m Deal

Leon Della Bosca AND Taryn Paris
Markets

Private Credit’s Biggest Risk in Expansion: Sameer Chopra

Taryn Paris
In this exclusive member-only webinar CBRE head of research Sameer Chopra explores the growth of the private credit mark…
LATEST
Wynnum Masterplan hero
Development

Masterplan Revealed for Brisbane Bayside Super-Site

Phil Bartsch
4 Min
Residential

Consolidated Reveals Next Riverfront Play in $64m Deal

Leon Della Bosca AND Taryn Paris
3 Min
Markets

Private Credit’s Biggest Risk in Expansion: Sameer Chopra

Taryn Paris
2 Min
Deicorp Five Dock Mixed-Use Precinct
Residential

Deicorp’s $1.8bn Inner-West Sydney Precinct Greenlit

Vanessa Croll
3 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/savills-government-drives-128-cbd-leasing-surge