tayser
July 29th, 2004, 03:21 AM
http://afr.com/premium/articles/2004/07/28/1090694023257.html [Premium]
Discounts lure more tenants to Melbourne CBD
Karina Barrymore
In a positive spin-off from the turmoil and rising vacancies in the Melbourne CBD office market, more tenants are weighing up their options about moving to the city as rents are increasingly discounted.
Lower rents are making the Melbourne CBD an affordable option for many suburban business, with about 25,000 square metres of non-city tenants moving into the city in the past 12 months, according to real estate agent Jones Lang LaSalle.
A major example has been the relocation of Telstra subsidiary Sensis from suburban Richmond to its 18,000 sq m office in the new CBD development QV.
But, in a more typical example of the rapidly growing trend, a small tenant looking for 1500 sq m in Melbourne's eastern suburbs ended up rejecting the properties offered and instead took up space in a CBD building for a similar price, JLL leasing director Kevin George said yesterday.
Health Super is leaving its Camberwell office for new space at 15 William Street, while another small tenant, Vision Super, also recently shunned its St Kilda Road premises and instead opted for a new lease at 1 Spring Street in the Melbourne CBD.
"After years of tenants vacating the CBD, the tide is starting to turn," Mr George said. "As vacancies rise and rents fall, businesses are turning to the city.
"This is a typical cyclical trend. A rising CBD rental market will result in decentralisation and a falling market leads to recentralisation as good office space with the best infrastructure becomes affordable."
Six deals totalling a further 12,000 sq m were about to be activated by suburban tenants moving to the CBD, he said, including tenants previously priced out of the traditionally more expensive CBD market.
JLL research director Nerida Conisbee said yesterday that the recentralisation matched employment trends in Melbourne and in the wider Victorian economy.
Fifteen years ago, 4.9 per cent of all jobs were located in the CBD but by 2003 this had increased to 5.9 per cent, representing a jump in numbers of an extra 50,000 people.
She said the finance, insurance and information technology industries were the major recentralised CBD tenants, increasing their combined presence from 26 per cent of the CBD 15 years ago to 44 per cent last year.
The government sector has also recently undertaken a major recentralisation program in Melbourne.
The Victorian government is restructuring up to 200,000 sq m of office space, with the bulk of this centred in the CBD.
The Child Support agency recently agreed to move from its outer suburban locations at Moonee Ponds and Box Hill into almost 6000 sq m at the revamped Melbourne Central.
Discounts lure more tenants to Melbourne CBD
Karina Barrymore
In a positive spin-off from the turmoil and rising vacancies in the Melbourne CBD office market, more tenants are weighing up their options about moving to the city as rents are increasingly discounted.
Lower rents are making the Melbourne CBD an affordable option for many suburban business, with about 25,000 square metres of non-city tenants moving into the city in the past 12 months, according to real estate agent Jones Lang LaSalle.
A major example has been the relocation of Telstra subsidiary Sensis from suburban Richmond to its 18,000 sq m office in the new CBD development QV.
But, in a more typical example of the rapidly growing trend, a small tenant looking for 1500 sq m in Melbourne's eastern suburbs ended up rejecting the properties offered and instead took up space in a CBD building for a similar price, JLL leasing director Kevin George said yesterday.
Health Super is leaving its Camberwell office for new space at 15 William Street, while another small tenant, Vision Super, also recently shunned its St Kilda Road premises and instead opted for a new lease at 1 Spring Street in the Melbourne CBD.
"After years of tenants vacating the CBD, the tide is starting to turn," Mr George said. "As vacancies rise and rents fall, businesses are turning to the city.
"This is a typical cyclical trend. A rising CBD rental market will result in decentralisation and a falling market leads to recentralisation as good office space with the best infrastructure becomes affordable."
Six deals totalling a further 12,000 sq m were about to be activated by suburban tenants moving to the CBD, he said, including tenants previously priced out of the traditionally more expensive CBD market.
JLL research director Nerida Conisbee said yesterday that the recentralisation matched employment trends in Melbourne and in the wider Victorian economy.
Fifteen years ago, 4.9 per cent of all jobs were located in the CBD but by 2003 this had increased to 5.9 per cent, representing a jump in numbers of an extra 50,000 people.
She said the finance, insurance and information technology industries were the major recentralised CBD tenants, increasing their combined presence from 26 per cent of the CBD 15 years ago to 44 per cent last year.
The government sector has also recently undertaken a major recentralisation program in Melbourne.
The Victorian government is restructuring up to 200,000 sq m of office space, with the bulk of this centred in the CBD.
The Child Support agency recently agreed to move from its outer suburban locations at Moonee Ponds and Box Hill into almost 6000 sq m at the revamped Melbourne Central.