New leases signed across Sydney and Melbourne over the past few months, including by Telstra and Thiess, have crunched available office sublease space around the country.
Landlord Commonwealth Property Office Fund last week confirmed it had agreed contracts over 12,200 square metres, which included 2900 sq m of expansion to Telstra at 222 Lonsdale Street and more for the Commonwealth Bank at 385 Bourke Street.
In Sydney, engineering firm Thiess will move from 26 College Street, East Sydney, to take up about 2500 sq m at 52 Martin Place, while insurance group TAL has shifted from Milsons Point to take up 10,000 sq m at 363 George Street.
The only other larger leases available in 2014 are the former Freehill lawyers offices at MLC Centre, which co-owner GPT's head of investment Carmel Hourigan said was undergoing refurbishment.
According to CBRE, sublet space is likely to have peaked, with no significant increases in stock expected in the short term. CBRE's city-by-city Sublease Barometer shows the amount of sublease space is hovering between 70,000 and 80,000 sqm in Sydney, Melbourne, Brisbane and Perth.
CBRE regional director Andrew Tracey said while 80,000 sq m was above historic averages, no significant tranches of new sublease space were expected in the near future.
"Much of the available stock is subject to very short lease tails with expiries in 2014 and 2015," he said. "Much of this stock is expected to revert back to direct vacancy, which will significantly reduce the volume of available sublease space."
In Melbourne, the moves by ANZ and NAB have reduced the stock of sublease space in the CBD by 5985 sq m during the month to 74,860 sq m.
Mr Tracey said that was significantly reduced from the year high of more than 100,000 sq m.
"A flight to quality has also emerged as one of the other key influencers, as businesses capitalise on opportunities to take advantage of high incentive levels to move to better quality space," he said.