Office owners increase incentives to get tenants

Business owners take heed – inner-city office space costs are on the decline, and you need to start looking for good deals now.

Business owners take heed – inner-city office space costs are on the decline, and you need to start looking for good deals now.

A new CB Richard Ellis survey of office space in 172 cities globally reveals in the 12 months to September 2008, the average occupancy cost rose 8% – double the 2007 rate.

But the good news is average occupancy costs are starting to fall, with 32 cities in the six months to September experiencing a drop in average costs – compared to merely 14 in March.

In Australia, the survey shows lease incentives in Sydney led to a 4% average drop in costs. Occupancy costs in Brisbane and Canberra have dropped 0.7% and 2.7% respectively in the 12 months to September.

CBRE research director Kevin Stanley says the decline means businesses should “absolutely” be looking around for good deals on office space.

“What’s happening is that owners are starting to increase incentives to attract offers. It’s also a sign of a time where owners are more astute to competition. They are more aware, and are quite happy to respond by way of getting incentives.

“These can be various things. It can be provided rent-free periods, and perhaps contributions to the fit-outs to the office,” he says.

“SMEs should be actively asking owners about them and trying to gauge information about them and get an average. You can ask other companies in the industry what the going rate is and what you might expect.”

But Stanley also warns rates in Australia and New Zealand are slower to fall than America and Europe.

“They’ve only really just started falling. If you’re leasing, it’s a good time to just wait and see what’s going to happen. It’s still early days.”