Vacancy drops, demand on the rise in Sydney office market

Property Council releases latest Office Market Report

The Sydney CBD vacancy rate has decreased to 6.3% in the six months to July 2015, down from 7.4% in January.

“The Colliers International NSW Office Leasing team has had a strong first half of 2015, with demand picking up across all sectors of the market,” Cameron Williams, Colliers International National Director of Office Leasing, said.

“The Sydney CBD has experienced a continued improvement in demand particularly from new technology companies, offshore investment groups and more recently the domestic finance groups.

“Whilst value-for-money buildings remain highly sought after, we have started to see a flight to quality trend emerge with demand improving for premium grade product.

“Activity and transactions remain strong from sub-500sqm occupiers, most of which have a preference for securing fitted out premises where possible.  Incentives in this market have reduced with well-located fitted out suites of a high quality quite often leasing within a few months of being available.

“Encouragingly, occupiers are growing and generally relocating to take more space, growth rights within leases are being sought and for the first time in many years we are committing occupiers to more space than they require from day one as the growth of their business in the future is their key driver.

“We expect tenants to continue to experience displacement as residential sites consolidate, particularly in the smaller metropolitan markets such as Epping, Crows Nest and St Leonards and in parts of the CBD like the midtown. This will add further upward pressure on demand for office opportunities that can offer long term tenure particularly at the value end of the market.”

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