Start-up firms account for CBD backfill April 2, 2010
THE stockbrokers and merchant bankers who broke away from major national and international financial institutions during the global financial crisis have become the new dominant trend in Sydney's office market, according to leasing agents.
This group of potential tenants are soaking up the smaller space in the central business district but are prepared to pay top dollar to secure a prime site.
Given the lack of large space available in the CBD for a big tenant until planned skyscrapers are built and leased, leases for the smaller space are helping to push the city's vacancy rate down.
Agents say there has been a large amount of the sub-lease space, known as backfill, available in the city for some time, which is now being let. This will help buildings such as Chifley Tower, at Chifley Square, which has a number of floors empty after tenants such as Mariner Financial Services and Babcock & Brown moved out recently.
The national director of office leasing at Colliers International, Cameron Williams, said clients were now looking to secure premium-grade office space in Sydney's CBD and were willing to pay top dollar of $1000 a square metre or more a year.
''Boutique operators in the financial sector have recorded a requirement with the real estate services group to fill more than 10,500 square metres of premium and A-grade office space in the last three months,'' he said. "This trend is a new phenomenon, definitely.''
Mr Cameron said one recent deal he worked on was a specialised financial firm moving in to a 234-square-metre office suite overlooking Circular Quay on a high floor of a Macquarie Place tower after signing a five-year lease paying an initial $1050 a square metre a year.
The director of office leasing at Colliers International, Jock Gilchrist, said the chief executives of so-called start-up firms and boutique businesses were now largely driving demand for premium-grade office space of less than 1000 square metres in the CBD.
''They are very particular about what they want and money's proving to really be no object," he said.
''They are establishing or repositioning a business and part of that is securing the right premises, with attributes such as harbour views and immaculate offices.''
