Need new office premises in 2017? Here's how to beat the rush.
As 2016 comes to an end, the Sydney CBD market continues to experience strong tenant demand, a lack of secondary stock and rising rents - will these trends continue into the New Year? The strongest demand experienced in the past quarter has been for smaller suites sub 400sqm, predominately due to the departure of many smaller tenants from buildings being re-developed in 2017. We have also seen a strong demand for creative office accommodation in well located heritage buildings from the tech sector and creative groups. As many tenants were required to commit to their new premises by the end of 2016, competitive tension in the market escalated. Some tenants are still working towards a timeline of Q1 & Q2, 2017, while those who are not pressured by such a timeline, face a similar challenge when looking to secure new premises.
While the Sydney CBD office market has recorded double-digit rental growth in the 12 months to July 2016 and vacancy rates are predicted to continue to fall throughout 2017,we expect the competitive tension of 2016 to be somewhat reduced in the new year, however the number of available options have diminished. So how do you stay ahead of the market in 2017? Read on.
- Evaluate your current position
- Spend the ‘quiet season’ evaluating your stay or go options
- Are there reasons why your current space will not be suitable for next year? Is your business expanding or is your lease running out?
- Understand the current market. Vacancy is estimated to be 4.7% at 31 December 2016, which means obtaining the ideal space may be a challenge!
- Be adaptable to change in the market and workplace efficiency.
- Create a list
- Do you need more room or could you downsize? Create a list of your requirements for the future of your business.
- Align this with your business plan for the next 12 months to understand what lease term is best suited to the business at the moment. Perhaps Co-working could even work for the shorter term?
- Does your space need improvements? Renovating a space takes time and impacts on productivity. Sometime an entire relocation is easier.
- Consider building amenity. The health and well being of your staff is at the forefront of many landlords and building upgrades at the moment. Many buildings provide quality facilities for the benefits of your employees.
- How much are you able to pay in rent and outgoings? Make sure that your finances are in order and avoid over budgeting!
- Do not procrastinate
- Once you have reached a conclusion – Commit so you don’t miss out!
- In a tight market, it is important to search for your new space as soon as you decide to move. We have seen many tenants with sufficient time to source and negotiate space miss-out due to indecisive and un-aligned decision makers. It’s not until an opportunity is missed that jumping at the next option may be just a solution rather than the ideal option.
- Avoid emotional attachment until you have negotiated on a space – continue looking even if you believe the space is the right one!
- Create a master timeline and share it with all those involved in the move to solidify and activate your decision
- Don’t ignore tenancies just because they might not fit every aspect of your criteria – the opportunities that can rise when you are flexible are sometimes the best! Trust your agents opinion to inspect something they recommend.
- Understand the Lease
- Make sure to have clearly defined real estate and business objectives
- Understand any make good obligation you may have in your current premises
- Make sure to incorporate exit strategies into a lease (i.e. termination or contraction options)
- Get Professional Advice
- To assist in your initial stay or go decision, speak to a professional leasing agent who can evaluate your position, advise on available opportunities and negotiate the terms for your next step. You may require the assistance of a tenant representative.
- It's easy for business owners to get caught up in the way a space looks, rather than the commercial terms of the lease, which can impact the space management, operations and financial obligation over the term of the lease. Professional advice is here to guide you.
- Contact our Leasing Agents in either our Sydney (02) 8238 0000 or North Sydney (02) 9925 0000 offices to help you make the right move in the new year!