September 2017 – Sydney CBD Office Market Update

11 September, 2017 / Vanessa Rader

The Sydney CBD office market continues to surprise. While the supply and withdrawal phenomenon continues keeping stock levels stable, the construction on the skyline and disruption to the city has been a greater than ever envisaged.

Demand has held keeping vacancies stable at their low rate of 5.9% and after remarkable rental increases the outlook for this continuing now looks a little more
uncertain. Affordability is a big issue for many tenants in the CBD faced with huge rental hikes and limited incentive, many turning to co-working spaces or the quest to purchase strata stock which has now seen an unprecedented lift in value rendering this also unaffordable to many.

 

 

These last five years have been interesting times for the Sydney CBD with many massive projects having a sizeable impact. This market has seen a significant transformation with the completion of three office towers at Barangaroo opening up the western waterfront precinct. The city also has seen massive disruption with the closure of George Street in parts making way for the light rail, while the Sydney metro has also seen the withdrawal of office buildings, others removed for residential redevelopment and many substantial refurbishment projects dotted around the CBD. However, despite all this construction the size of the overall office market has shown limited fluctuations. High withdrawals have combatted high supply with net supply remaining close to
nil most periods over this five year time frame. The total stock level for the Sydney CBD is 5,086,316sqm and despite the many completions since January 2012, there has only been a
real change of 3.1% in the stock level. The six months to July2017 highlights this trend with the completion of 83,534sqm mostly of refurbished stock such as 60 Margaret Street,
Darling Park Tower 3 and 80–82 Pitt Street which was somewhat cancelled out by the withdrawal of 10 properties totalling 75,821sqm mostly for demolition including 55 Hunter Street, 2 Bligh Street and 175 Castlereagh Street.

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