State of the Market - Tenants breaking leases

Just thought I'd share some intel from 'ground zero'.
Some of you may know I own a commercial agency on Sydney's lower north shore and have a reasonable rent roll. Over the past 10 years I'd guesstimate we have 3 or 4 tenants a year advise they'd like to get out of their lease for one reason or another. They stay in the suite paying rent until we've found a replacement tenant and everyone's happy.

As of 4pm this afternoon I've just had my 4th tenant in 2 WEEKS advise they cant pay the rent and need to break the lease. 2 have handed back the keys and say 'keep the bond', one has said they'll pay the rent until we find a replacement and the fourth has offered 4 months rent. I've already had a few break leases leading up to now but another 4 in 2 weeks has never happened. For clarity there's 2 offices and 2 retail. I don't have much to do with Industrial properties. Also probably worth mentioning two of these tenants exercised 3 year options just six months ago
I get the feeling the economy is in for a rough ride.

From my point of view commercial agents get paid when people move, growing or shrinking it doesn't really matter as long as they don't stay put.

Let' see how this plays out over the next 6 months.

 

Interesting feedback @Shady - in a few of the premier AAA buildings that I have dealings, there has been significant subletting action this has been both in the CBD & west CBD. I haven't seen the same occurring in the other capitals (Bris, Melb, Perth) but however I have noticed that leasing activity is still quite strong in these centres.

 

were the 2 just signed 3 year options the offices or the retails?

 

Both were the offices. The retail had about 6 months left on their lease.