Sydney CBD office tenants are having to absorb unprecedented pressure arising from record low vacancy levels, while the market waits for approximately 303,677m² of new office stock to come online towards the end of 2020. This pressure is manifesting in first offer lease renewals incorporating 20-44% rental increases in concert with record low incentive levels. These dynamics have resulted in tenants increasingly renewing, rather than exploring relocation options at expiry, as it is more often the only financially viable option should they wish to remain within the CBD. The other fall back to this is tenants are forced to look deep into their own pockets to fund out dated workplaces, to bring them in line with current day work practices to retain staff and leverage staff engagement.
So, what is one (being you the tenant) to do?
- Don’t Panic.
- Start early.
- Engage an independent professional.
- Consider if your organisation is a candidate for ‘new ways of working’ and the efficiencies derived from such strategies.
- Right size your workplace.
- Undertake a comprehensive Stay V Go analysis.
- Don’t underestimate the potential of creating of competitive tension between owners to secure your lease covenant.
- And remember that your workplace environment is equally important as your CRE equation.
One of the most effective ways to get a better lease agreement is engage the services of an independent expert. PCG knows the national property markets inside and out and can use our knowledge to help you negotiate the best possible lease. We will be able to match your company’s needs with the optimal solution through a comprehensive re-calibration of your CRE metrics and workplace solution to the needs of your business.