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In 2018, around 20 leases of ≥5,000 sqm were formalised. Demand came from both the public and private sectors, and was supported by lease expiries, strong business confidence and nation-leading state final demand and population growth. While many of these leases were precommitments for 2020, near-term demand for space has also been strong and is expected to stay that way in 2019, holding vacancy at 3-4%.

Landlords in Melbourne’s fringe office markets have been undertaking capital expenditure to aid in tenant attraction and retention. Upgrades have included end of trip facilities, lobbies, lifts and HVAC (Heating, Ventilation and Air-Conditioning). The upgrades have helped attract new tenants such as JB HiFi and Asahi and contributed to multiple renewals over past six months.

With Circular Quay Tower, Quay Quarter Tower, Wynyard Place, 60 Martin Place, the Light Rail and Sydney Metro among the major projects underway, Sydney CBD office workers have grown accustomed to the sights and sounds of billions of dollars worth of construction work. 151 Clarence Street (22,000 sqm) reached completion in Q4, but major new developments are still at least a year away, ensuring that Sydney’s lack of contiguous floor space continues for some time to come

Momentum in the Japanese economy slowed with a negative 2.5% growth in the third quarter of 2018. This is largely related to the drop in exports and consumer spending due to the occurrence of natural disasters. Airport closure also caused a decrease in exports and the number of inbound tourist spending, which makes up part of total exports.