License article

Lease delivers bright spark for waning office market

BUSINESS software provider MYOB will become the new tenant of Melbourne's largest suburban single-floor office, to be vacated by the restructured Centro group.

A 10-year lease negotiated by CBRE's Richard Height and Anthony Park will allow MYOB to consolidate 500 staff in a single office space and move from its Tally Ho Business Park address.

Centro Retail Australia's headquarters have been at the Centro-managed The Glen shopping centre on the floor above David Jones for more than a decade.

The shopping centre landlord, which overstretched during the global financial crisis before being relisted and restructured last year, would move its corporate staff to 2200 square metres of office space at 35 Collins Street next year, Centro Retail's new chief executive, Steven Sewell, said. Other state-based staff will be in Box Hill.

The deal may be a rare bright spark in Melbourne's office market, which is set to be severely affected by the changes in Victoria's economy over the next two years, forecaster BIS Shrapnel maintains.

Local weakness in the economy will dramatically affect office-based employment in Melbourne, BIS Shrapnel's Melbourne Commercial Property Prospects 2012 to 2022 report suggests.


It says:

■ Dwelling building activity is set to decline over the next two years, compounding the existing weakness in the building industry, which is under pressure from falling non-dwelling building.

■ The high dollar is taking a toll on manufacturing, tourism and education services, as well as on the financial services sector, which is looking to offshore operations.

■ Significant cuts to public spending have only just begun, and will get deeper over the next two or three years, providing a significant and prolonged drag on the economy.

Those factors would impact ''particularly hard'' on the stand-alone office workforce.

Another negative on demand - falling workspace ratios (the amount of occupied office space per worker) - was also expected to continue, it said.

The report forecasts negative net absorption of 130,000 square metres in the metro area in 2012-13. But the CBD and Docklands would be partly insulated from that effect because tenants were moving there from the suburbs.