Economic Outlook
As Europe, US and Japan continue to struggle with mounting debts and slow recovery, China's continuing investment in infrastructure and resources to facilitate future growth is all good news for the Australian economy in 2010 and 2011.
In 2009 TRS experienced:
- 60% increase in lease transaction negotiations and
- 35% decline in office fit-out activities
Clear indicators that tenants took advantage of market incentives opting to either remain in their existing premises or relocate to vacant fitted premises.
Office vacancy levels through Australia's CBDs and peripheral locations have increased in 2009 representing approximately 9.0% of total supply — this is the highest recording since 2000. In addition new transactional take-up is exceptionally low and these key indicators continue to drive a Tenant's Market.
Tenant's Market Continues...
The good news is that 2010 to 2011 will continue as a "Tenant's Market" and a wide range of opportunities exit for tenants to review their current operations to seek financial reductions coupled with space rationalisation.
As a tenants market our clients will continue to harness independent control offering greater value through:
- High market vacancy
- Increased Negotiation Leverage and Higher Incentives
- Competitive Fit-Out Costs
- Lease Re-Negotiation Opportunities
- Subleasing Opportunities
Negotiation Improvements
Throughout 2010 tenants should be aware of the following improvements:
- 2010 to 2011 will continue as a Tenant's Market
- Current vacancy levels do not account for underlying sub-lease vacancies
- Tenant incentives will remain at the highest levels provided in the property market
- Many landlords are accepting Insurance Bonds as opposed to Bank Guarantees
- Fit out costs will decrease once the Government reduces construction stimulus spending in the public sector therefore creating greater fit out competition in the private sector
Further Information Contacts
For further information or advice on lease negotiations please contact:
| Mark McGrath: | Tel - 02 8243 6711 | Email - mm@tenantrep.com.au |
| Mark Lockwood: | Tel - 02 8243 6701 | Email - ml@tenantrep.com.au |
