Boral to ditch Sydney CBD for cheaper suburban office digs: report

Australia’s largest building materials provider, Boral, is reportedly seeking to move its head office out of the Sydney CBD to cheaper and smaller office space in either Chatswood or North Ryde.

Boral currently leases floors 38 and 39 in a 43 storey Bridge Street building but is already sub-leasing half of the 2,500 square metre space, reported The Australian.

It follows Boral cutting 11,000 jobs last year as the construction sector continues to contract.

Australia’s construction industry notched up three years (36 months) of continuous contraction in May, according to the most recent Australian Industry Group/HIA Australian Performance of Construction Index (Australian PCI).

Earlier plans were for the company to relocate from 50 Bridge Street to 1 O’Connell Street, but these plans were cancelled after chief executive Mike Kane decided the company did not need to be in the CBD.

AMP Capital and law firm Baker & McKenzie are the anchor tenants in the Bridge Street tower, which is jointly owned by the Australian Core Property Portfolio (ACPP) and the AMP Capital Wholesale Office Fund (AWOF).

CBRE recently reported that Sydney’s office vacancy rate (currently around 6.5%) could rise due to the amount of office space being sub-leased.

It reported that the amount of sublease space available in Sydney's CBD reached 73,872 square metres in April, the highest in two-and-a-half years, as financial services firms downsized their operations.

'Consolidation' or 'contraction' were the primary reasons for subleasing space with finance and insurance firms accounting for nearly 40,000 square metres of available sublease space followed by property and business services (around 10,000 square metres) and government tenants (10,000 square metres)

More than half the sublease space available (52%), is situated in the city core.