Stay or Go?

Most occupiers treat a lease expiry as a renewal conversation. It isn’t. It’s a Stay vs Go decision — and right now it’s the single most consequential call your organisation will make about its accommodation this decade.

Here is the uncomfortable part. The market that decides whether you should stay or go isn’t today’s market. It’s the market over the next two years — and on every credible read, that market is turning against tenants who wait.

Supply is switching off. Construction costs have made new towers largely unviable. The flight to quality means the best buildings are filling first. In several markets the question is no longer how big an incentive can I get — it’s will there be space in the building I actually want?

The cheapest lease you’ll ever sign is the one you started planning 24 months early.

1. Why two years, not two months

Three forces are tightening at once. Each one shifts leverage away from tenants — and they compound over a two-year horizon.

A SUPPLY DROUGHT IS HERE
Feasibility has collapsed under construction costs. Most cities face years of little or no new CBD supply. Less stock means less competition for your tenancy — and far less reason for landlords to keep discounting.

INCENTIVES HAVE PEAKED — THE TURN HAS STARTED
Incentives are still historically high, but prime vacancy is tightening. As it does, net effective rents rise and incentives compress. Brisbane and Sydney are leading the turn; Melbourne is forecast to follow from 2027. Waiting for “a better deal” may mean watching today’s deal quietly evaporate.

FIT-OUT IS THE SILENT BUDGET KILLER
Trade costs sit at record highs. A generous-looking incentive can still leave you short once the space is actually fitted out. The smart play is buildings with quality existing fit-out — or an incentive negotiated as a properly documented fit-out contribution, with a superintendent protecting cost and quality.

2. Four cities, four warnings

Same country, very different weather. Here’s where each market sits — and the specific risk that should be on your radar before you decide.

3. How to run the Stay vs Go call

Right now, the majority of our clients are running exactly this analysis — should we stay and renegotiate, or go and relocate? It is rarely obvious, and it is never a coin toss. Markets turn slowly, then all at once. The decisions that protect an occupier are unglamorous and almost always early. The short list:

• Start 18–24 months before expiry. This single habit is worth more than any negotiating trick. It preserves your choice of building, maximises leverage, and stops you negotiating against the clock.
  Protect your options now. Review option clauses, market-review mechanisms and make-good obligations early. The most expensive surprises in a lease are the ones found in the final quarter.
• Model net effective, not headline. With construction at record highs, the real cost is after fit-out — not the headline incentive. Weigh buildings with quality existing fit-out, and use a superintendent to keep contractors honest.
• Don’t confuse cheap with smart. A low secondary rent that staff won’t return to is a false economy. Utilisation and talent attraction belong in the calculation alongside rent.
• Mind the conflict of interest. Many agencies act for both landlords and tenants. Insist on advice from someone who acts for tenants only — never for the landlord on the other side of your deal.
• Decide deliberately on pre-commitment. In tightening markets — Brisbane especially — committing now versus waiting is the defining call. Model it; don’t default to “wait and see”.

In a tightening market, the tenants who win aren’t the ones who negotiate hardest. They’re the ones who started earliest.