Decade high demand in Sydney CBD office market

The Sydney CBD office market is experiencing its strongest demand in a decade, according to the Property Council of Australia’s latest Office Market Report.

"Sydney’s office market continues to have the lowest vacancy rate and the strongest demand of all capital cities," Acting NSW Executive Director Felicity Wilson said today.

“Sydney’s CBD saw positive demand at the top end of the market, matched by strong supply additions”.

 “Net absorption totalled 96,745sqm in the six months to January 2016 – more than triple the historic average”.

The vacancy rate across the market remained steady at 6.3 per cent in the six months to January 2016.

“While the vacancy rate for premium grade assets increased from 5.2 per cent to 8.1 per cent, reflecting the timing of new supply, the A grade vacancy rate fell from 6.7 per cent to 5.4 per cent”.

“Premium grade assets still accounted for the bulk of new demand with 100,139sqm of net absorption”.

“Withdrawals across the market over the past six months totalled 47,217sqm while 149,498sqm of new stock was added.”

Ms Wilson said 243,126sqm of new stock was due to enter the market in 2016.

“The NSW economy is going from strength to strength, with the three best performing Non-CBD markets across the country in NSW.”

Media contact:  Felicity Wilson  |  M  0410 509 280  |   E  fwilson@propertycouncil.com.au

 

Analysis – SYDNEY CBD MARKET

Headline comments:

  • Sydney CBD remained steady at 6.3 per cent
  • Supply was matched by demand and withdrawals
  • Demand was concentrated in the higher grades of space
  • There is a steady stream of space in the pipeline over the next 12 months

 

Vacancy analysis:

  • Vacancy in the Sydney CBD office market remained at 6.3 per cent
  • 149,498sqm was added over the period while 47,217sqm was withdrawn
  • Net absorption totalled 96,745sqm

 

Premium:

  • Vacancy increased from 5.2 per cent to 8.1 per cent
  • This was due to 133,498sqm of supply additions
  • Net absorption totalled 100,139sqm

 

A Grade:

  • Vacancy decreased from 6.7 per cent to 5.4 per cent
  • This was due to 38,897sqm of net absorption
  • 16,000sqm of space was added over the period

 

B Grade:

  • Vacancy increased from 6.2 per cent to 6.8 per cent over the period
  • This was due to -47,644sqm of net absorption
  • 41,057sqm of space was withdrawn over the period

 

C Grade:

  • Vacancy decreased from 6.9 per cent to 5.3 per cent
  • This was due to 6,160sqm of withdrawals and 2,725sqm of net absorption

 

D Grade:

  • Vacancy decreased from 5.5 per cent to 4.2 per cent
  • This was due to 2,628sqm of net absorption

 

Future supply:

  • 243,126sqm of new stock is due to enter the market in 2016
  • No new space is scheduled to be completed in 2017
  • 38,600sqm is due to come online from 2018 onwards
  • A total of 118,700sqm of space is mooted

 

 

Key market indicators, Sydney CBD (aggregate)