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Colliers International (Australia)

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Australian Office Tenants Back in Business Finds Colliers International

Sydney, Australia, June 17, 2010 --( Australian office tenants are again in growth mode, with a quarter of businesses indicating they are planning to relocate within three years, according to new research announced today by Colliers International. Tenants said the number one factor fueling relocation was business expansion.

The Colliers International Office Tenant Survey assessed 351 decision makers leasing commercial property, who occupy space of 500sq m or more in the head office locations of Sydney, Melbourne, Brisbane, Adelaide, Canberra, Perth, Auckland and Wellington with 26 per cent of respondents occupying space in excess of 5,000sq m.

The research gauges current and future expectations of office tenants across Australia and follows Colliers International’s 2006 and 2008 Office Tenant Surveys.

Felice Spark, Colliers International Director of Commercial Research, said the 2010 Office Tenant Survey findings showed the Global Financial Crisis is no longer affecting leasing decision-makers, with businesses now actively focused on expansion, securing quality new premises and improving business performance.

“The findings have shown tenants from Brisbane and Melbourne are more likely to relocate in the next three years, while tenants from Perth and Adelaide are more likely to redesign their fit-out in the same time frame,” she says.

“Several changes to tenant motivations to move have become apparent between the two surveys, including a an increased desire for improved building management.”

In a five-year window, being this year and two years either side, 78 per cent of Melbourne tenants will have either relocated or redesigned their workplace, more than any other city.

More than six in 10 organisations have implemented or intend to implement design initiatives that promote team development and collaboration, flexibility to support changing needs, good environmental performance and health and wellbeing of staff.

Simon Hunt, Colliers International Managing Director of Office Leasing, said a prime consideration amongst tenants in workplace redesign is the provision of areas for privacy, which is not surprising when, on average, 75 per cent of an organisation’s employees now tend to work in an open-plan environment.

“What we’re going to start seeing is a correction in workplace design with more dynamic office spaces reflecting people’s differing needs – a more balanced equation of workstations, quiet rooms and public spaces,” he says.

Currently the median workspace ratio is 19.4sq m per person across Australia, while in 2008 it was a smaller 17.6sq m. Canberra and Melbourne currently have the largest median workspace ratio of at least 20sq m and Sydney has the tightest at 16.7sq m.

“The workspace ratio increase has probably been a reflection of the GFC,” says Ms. Spark. “During this period many tenants did not relocate and maintained the same net lettable area, but did reduce their headcounts, thus resulting in the inflation of workspace ratios.”

Ms Spark said 72 per cent of tenants indicated they believe staff expectations regarding workplace design had significantly changed over the past three years.

“Staff are now more likely to expect new and modern premises to work in and are more environmentally aware.

“In particular, Australian staff say that air conditioning/air quality, bike racks and showers, and access to shops and café are more important factors in 2010 than in 2008.”

As Australian businesses become more educated and aware of climate change, the findings have revealed a dramatic increase in the public reporting of their premises’ environmental performance.

Forty-five per cent of tenants now also have a process for evaluating the environmental performance of a building before deciding on occupation, and 43 per cent said they now report their environmental performance publicly, up from 35 per cent in 2008.

Hand-in-hand, tenants are placing pressure on their landlords to be more environmentally aware.

Forty-eight per cent of Sydney tenants and 45 per cent of those in Canberra rated the efforts of their landlords as good/excellent in improving their building’s environmental performance, compared to just 31 per cent in Brisbane, 33 per cent in Perth and 36 per cent in Melbourne.

Overall, though, tenants’ ratings of their landlord’s efforts to improve building environmental performance had declined in 2010 from 2008.

Operational cost savings and Corporate Social Responsibility were the most cited factors driving tenants’ decisions to occupy a green building.

“Fifty-three per cent of organsiations think there is strategic value in occupying a green building and would be prepared to pay more rent for this merit, while a majority of those who disagreed cited they were not willing or able to pay a higher rent and also that there is no recognition from clients/public to validate the value,” says Ms Spark.

“From talking to major corporates, it’s clear they see cost savings and benefits in not only reduced energy consumption, but also other factors such as increased productivity, decreased employee turnover, less sick leave and better morale.”

Contact Information
Colliers International (Australia)
Sarah Stewart
+61 2 9257 0210

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