Strong demand for office space continues in Sydney, driven by the expansion of business services tenants.

Much of this interest has been from tenants who occupy less than 1,000sqm, many of whom are being forced to move due to assets being withdrawn from the market. As a result, conditions are becoming very tight in the more affordable A-grade and B-grade market segments. Incentives have been steadily trending downward, particularly for lease renewals, due to improving market dynamics, which is boosting effective rental growth. The supply pipeline is heavily weighted to the near-term, as Sydney will see significant asset withdrawals over the next few years due to the Sydney Metro rail link project, residential/hotel conversions and office redevelopments.

Highlights

  • 298,085 SQM
    Total Lettable area
  • $2.13 Billion
    Book
    Value
  • 3.8 Years
    Weighted Average lease expiry

Outlook

A- and B-grade markets to outperform as available options in some precincts become scarce

Tight supply and robust demand will continue to place downward pressure on vacancy over the medium-term, driving effective rental growth

Yields are likely to compress futher, supported by the improving market fundamentals