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Our Top 5 Leasing Observations

Posted on 05 October 2021

The commercial leasing landscape has changed dramatically over the last 18 months, here are our top observations…

 

1. Tenant requirements are changing

  • Tenants are now thinking outside the box – due to tenants changing and adapting to the “new normal”, we are seeing more and more different uses entering the retail space given the growing increase in retail vacancy.
  • Suburban strip retail has seen an increase in activity due to the shift from the CBD with higher numbers of clientele now working closer to home.
  • Increased office demand in suburbs – Office tenants are now steering more towards properties surrounded by great amenities and leafy outlooks with parks nearby.
  • Companies are now offering more flexible working arrangements – The last 18 months have clearly outlined our ability to work successfully from home, many businesses are now taking this into account when considering the space they require.

2. Incentives

  • Due to the increased number of vacant commercial property available for lease, the method of enticing tenants to take up a lease has changed dramatically.
  • The amount of “incentive” requests, whether it be rent free, capital contribution or landlord works, has more than doubled in the last 18 months.
  • Increased incentive is with the intention of capturing a tenant for the property without reducing the rental value.
  • Incentive for properties requiring significant fit-out works is currently sitting between 30-40% of the value of the lease.

3. Post Lockdown Activity

  • Exiting previous lockdowns, the Aston Team have seen a significant increase in activity due to a pent-up demand from tenants.
  • Leasing enquiry has remained steady across the year; however, it has greatly increased in the weeks following an easing of lockdown restrictions.
  • Our Team saw a jump in lease deals transacted of approximately 100% in the months post-lockdown in late 2020 and early 2021.
  • With one-on-one private inspections now being allowed for vacant properties we predict that we will see a large number of lease deals being transacted with business’ preparing for life in 2022.

4. Video Walk-throughs, Professional Photography and Floor Plans

  • With the way tenants have had to view and inspect property dramatically changing over the last 18 months, so too has the way we advertise.
  • Tenants now more than ever, are wanting to view their properties of interest in a higher level of detail in order to shortlist these properties, and ultimately make their decision to lease.
  • Many tenants are now choosing to look past properties that do not provide clear professional photos and floorplans online.
  • Video walk-throughs and virtual tours are now being used heavily to give tenants a greater feel for the property without the need to physically inspect initially.
  • These virtual resources have allowed tenants to ‘pre-qualify’ properties before seeing them in person, reducing time spent inspecting an unsuitable property.

5. Presentation

  • Similar to the previous point, the way that properties should be presented has also seen a shift.
  • A clean & clear space is largely what tenants are hoping to find when looking to lease.
  • Tenants are now seeking properties that require less fit-out work required.
  • Tenants are less likely to take on a space where they cannot visualise their business residing, despite incentives offered to renovate the premises once the tenant’s lease commences.
  • This means that basic presentation is a must – Flooring, painted walls, ceiling condition, wiring etc.

As we move forward into “the new normal”, we expect clients and tenants to continue to find new ways to change and adapt in the Commercial Real Estate market. We look forward to seeing another burst of activity post-lockdown and expect demand in the suburbs to remain at a steady growth. The Aston Commercial Leasing team will work with owners to ensure their property is in the best condition to attract new tenants, while continuing to provide our high level of service. If you require any leasing assistance, please feel free to reach out to any one of us. Let’s embrace the “new normal!”.

 

Leasing Team.

Josh Burne | Leasing Executive
Lucy Kuhne | Leasing Executive
Sebastian Origlia | Agency Executive

 

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