Record demand from small medium enterprises in Sydney has driven rent free incentives to a record low.
Leading corporate specialist industrial agency Bawdens recently released research to clients examining how much rent-free period was granted to a new lessee.
The firm examined 65 transactions in the SME space, that is leases of buildings less than 500m2 in area.
All transactions were completed during the six-month period 10th October 2021 to 31st March 2022.
A total of 20,210m2 was reviewed. The average building area was 311m2. The results can be seen in the table below.
60% of transactions had no rent-free period granted.
Only 10% of lessees obtained 2 weeks. 4 weeks rent free period was negotiated 21% of the time. 5% of lessees obtained 6 weeks and just 4% of lessees secured 8 weeks of net rent-free period.
In Issue 148 of Industrial Property News a related study completed by Bawdens observed that market rent reviews completed in 2022 resulted in an average increase in rental of 16% for the year to date.
The lack of available warehouse space, in addition to driving an increase in rentals is also resulting in lessors being able to increasingly, lease their property with little to no loss of net rental under a new lease.