The government's plan to shift offices and regional centers from the central business district to the suburbs may affect office demand in the business district says a Colliers International report.

Government tenants comprised of 30 percent of leased floorspace in Sydney's CBD in 2010 while government tenants in Brisbane made up more than 40 percent of rented office space.

Colliers International leasing managing director Simon Hunt said that policies to decentralize, if done aggressively,"would have an enormous impact on tenant demand given the reliance of our capital city CBDs on government as a tenant."

While government offices need to be in the vicinity of the CBDs, some local governments are considering pooling investment and creating employment in suburban and regional centers.

One major consideration for the decision is that suburbs charge much cheaper rent especially in areas such as Perth, Brisbane and Sydney.

There is an oversupply of office spaces in Brisbane CBD but "rents there doubled overnight five years ago, and many state government tenants are stuck with high rents on long-term leases that are typically between 10 and 15 years," Hunt said.

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