Identifying Target Tenants in Sydney’s Commercial Real Estate Market

Speculative suites are designed to attract tenants to lease commercial space. So, who are these tenants? Identifying prospective tenant groups and their needs is pivotal to the overall design and leasing strategy of buildings.

Full floor speculative suite created by Sheldon Interiors for JQZ in St Leonards, NSW.

Understanding your market and establishing target clients

Market conditions and target tenants are central to decision making on the specific requirements of a fitted office space. For asuite to lease quickly, it is paramount that key macro and micro trends within commercial real estate are evaluated during the preliminary design phase. Key considerations include:

The market: Consult with industry leaders and market reports to recommend a fitout solution that aligns with macroeconomic trends and outlooks.

The space: Evaluate the size and functionality of the space and adapt the design to consider the types of client that would suit the NLA specifics.

The building: Survey the types of tenants and facilities currently within the building to identify opportunities, trends, and oversaturation.

The area: Certain areas attract certain tenant types. A clear understanding of the industries and company sizes prevalent in the area assists in prioritising workplace needs.

Who is likely to lease a spec suite?

In the past 24 months, tenants that have leased Sheldon’s spec suites largely consist of financial, professional, and technological services companies. The adaptability, size, and requirements of companies in service industries make them viable for the generic yet aesthetically sophisticated appeal of spec suites. Popular among client facing companies, fitted spaces are increasingly incorporating extensive front of house areas.

Who is likely to engage a D&C contractor directly?

In the past 24 months, industries with more specific office requirements (warehouse space for industrial companies, laboratories for health/pharma companies, and security requirements for Government agencies) have beenmore likely to engage a D&C contractor for a fully customised office. Companies that rely on a bespoke client and employee experience, notably multi-national corporations with global offices, tend to prefer a bespoke brand-aligned office.

Identifying target tenants and aligning your space accordingly

Industry: Companies have various reasons for wanting to move to a specific location, including positioning of clients and proximity to related facilities like warehouse space. It’s important for building owners to conduct market research to identify which industries are flocking to the area, in order to craft a space that is relevant to the requirements of potential tenants. Once identified, target industries can be accommodated for by creating profession specific spaces, such as a showroom space for B2C clients.

Profession: It’s crucial to identify the type of personnel that will be working in the office. For example, while the five levels of 118 Mount St constructed by Sheldon from 2022-2024 hosted a range of industries (financial, industrial, technology, and pharmaceuticals), the primary users of each office were the companies’ finance, marketing and supporting services teams. Spaces were created with these professionals in mind.

Personnel: The number of people who will be in the office is key to how it is designed. The size and density of speculative suites should reflect the size of teams that provide the most opportunity for leasing. An efficient spec suite should be flexible for future growth and personnel changes, which can be achieved through modular joinery and open plan work areas. An adaptable space is more likely to be tenanted over multiple lease terms.

Hybrid Working: 97% of Australian companies now offer some kind of hybrid working arrangements to employees. It’s important to understand the requirements of a hybrid workplace. Currenttrends surrounding hybrid and remote working reveal an increase of employers requiring staff to work 3-5 days a week in the office (11% YOY increase from 2022-2023). It’s therefore critical to develop a strategy that meets these market preferences. Knowledge around a company’s office capacity and density due to hybrid/remote working arrangements is key in delivering suitable workplaces for them.

Note: This article was written alongside Sheldon's Speculative Suite Handbook 2024/2025. To download the free handbook you can click HERE.