Office leasing rebound following lockdowns and Omicron

Photo: Note Viriyarat (Copyright Australian Property Journal)
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CONFIDENCE in the Melbourne office market is back in swing, as leasing enquiry and demand surges over March.

According to JLL Research, March saw Melbourne’s office market make major gains on February, with formal tenant representation briefs across the state recording a 19% increase on the previous year and 63% on the previous month.

These increases reflect 62 briefs recorded over the month, for 54,840sqm of office space.

“The overall increase in activity across the entire Melbourne office leasing market over the past month is an encouraging sign and a reflection of business decision-marking looking to solidify workplace strategies and return to the office following last year’s lockdowns,” said Nick Drake, joint head of office leasing for JLL, Victoria.

Drake added that JLL’s metropolitan office leasing team has concluded 25 deals representing more than 38,000sqm of space in the first quarter of 2022.

Two deals completed neared half of the space leased by the team, with the 10,000sqm lease at 611 Elizabeth Street by the Royal Melbourne Hospital and 9,000sqm of deals at M-City (2107-2125 Princes Highway, Clayton) for three tenants.

Nationally, there were 80 formal leasing briefs issued to the market in the first quarter, a 5% increase on the same quarter in 2021.

Transactional data from JLL also shows that demand and activity is still strongest for sub-500sqm spaces, with this segment representing 65% of the group’s deals over the quarter.

Back in Melbourne, the CBD headline vacancy rate tightened by 0.2% to 14.8% in 1Q22, with the 12 months to March seeing a positive net absorption of 38,600sqm.

Over the same period, the South East suburbs saw 24,200sqm, with 1,700sqm over the first quarter, while the Melbourne Fringe recorded 33,200sqm over the quarter.

“The Melbourne CBD recorded a number of large leasing transactions over the quarter, and we will continue to see healthy levels of enquiry from small and mid-sized organisations and owners are willing to split floors and undertake speculative fit-outs to capture this enquiry,” concluded Drake.

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