Is it worth holding off getting office space until the rental market calms down?
Thursday, March 17, 2011/
I’ve read a lot recently about rental prices in Australia going through the roof. Is it worth holding off getting office space at the moment until the market calms down, or will it only get even more expensive?
If you’ve read that rental prices across Australia are expected to rise, you may have read correctly – but it really depends on which city you’ve been reading about.
The markets in some cities have seen rents rising in 2011, while others have not been as buoyant.
Like any market, it is a simple question of supply and demand. According to Jones Lang LaSalle, rental rates for top grade office space in Perth are expected to rise as much as 7-10% this year, based on growing demand from resource firms.
Melbourne may also see a rise, and the limited supply of new buildings currently in development means that for the near future it should be a landlords’ market.
Sydney, however, has remained fairly stable, as has Canberra.
So what does this mean for you? While Grade A building don’t offer smaller spaces suitable for start-ups or smaller businesses, there is invariably a knock-on effect as rents rise and businesses are forced to take different types of accommodation.
What’s clear is that there’s still lots of uncertainty in the market, which means companies are looking for flexible options.
One point I should make is that it is not only the rental rate you need to consider when looking at moving into new office space.
Depending on your requirements, the costs of setting up and fitting out your office could more than offset the increased rental rates over the lifetime of your lease.
Many companies simply don’t have the time to spend to find a location, and deal with the hassle of fitting it out and setting it up as a productive workplace.
So if you’re looking at your first office, you might want to test the waters with a serviced office or even a shared space. This will allow you to control your spend, and give you the ability to grow as necessary.
Should you simply work from home and wait out the market? Well, as with any decisions related to your workplace, that should depend more on what your business needs than on external factors such as the market rate.
There will be a variety of options available in every market. The first step will be to research your options: check your local papers for commercial listings, pop into your local business centres, speak to agencies such as CBRE, Jones Lang LaSalle and Colliers, or try an online broker such as Instant.
Set a realistic budget for your business, and work within that.
The most vital thing is to find the right choice for you, one that will be as hassle free as possible and will allow you to focus on what’s really important: your business.
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