The future is looking strong for the Sydney CBD with demand for commercial office space increasing, despite recovering from a pandemic and new hybrid working arrangements.
Half yearly data released today in the Property Council of Australia”s Office Market Report reveals strong demand for office space, with vacancy rates remaining steady 11.3 per cent “” up from 10.1 per cent and recording the highest future supply amount across the country to come online in 2023 and 2024.
Property Council”s Acting NSW Executive Director Adina Cirson said contrary to many predictions and media reports, the office was not dead.
“Our results today show that in fact the office is in even more demand than previous reports,” Ms Cirson said.
“The next two years for the Sydney CBD will witness 90,141sqm of new stock to enter the market in 2023, followed by 147,357sqm in 2024, which is the highest in the nation.
“Not only ds this provide certainty for our CBD, it proves that the Sydney office market will remain as the benchmark, despite the challenges we have faced in the last three years.”
Ms Cirson said the increase in demand demonstrated how companies were taking a “˜flight to quality” to entice workers back to the office.
“Businesses have realised they will always need a place for employees to come together to receive the benefits of collaboration. Those that have the best offices will have the greatest chance to attract and retain strong talent.”
Ms Cirson said while the latest results were positive, we must continue to advocate for investment in the CBD and greater collaboration by government with the private sector to ensure our economic engine rooms “” our city centres thrive.
“The NSW Government should establish a CBD recovery and revitalisation industry partnership group in collaboration with the City of Sydney, the Property Council, and other peak bodies to advise Government on the practical steps to continue the ongoing renewal of the CBD,” Ms Cirson concluded.
Office Market Report January 2023
Analysis “” Sydney CBD market
- Sydney CBD vacancy increased over the period
- This was due to supply additions and negative demand
- Negative demand was concentrated in the lower grades of space
- There is a significant amount of space in the pipeline to be delivered over the next 2 years
- Vacancy in the Sydney CBD office market increased from 10.1 percent to 11.3 percent
- This was due to 71,707sqm of supply additions and -19,738sqm of net absorption
- 22,379sqm of space was withdrawn over the period
- Vacancy increased from 8.6 percent to 10.1 percent
- This was due to 55,207sqm of supply additions
- Demand was positive with 29,106sqm of net absorption recorded
- Vacancy increased from 11.5 percent to 11.8 percent
- This was due to 16,500sqm of supply additions and –
- 3,630sqm of net absorption
- Vacancy increased from 10.5 percent to 12.6 percent over the period
- This was due to -36,101sqm of net absorption
- Vacancy increased from 8.6 percent to 10.3 percent
- This was due to -7,313sqm of net absorption
- Vacancy increased from 7.2 percent to 8.2 percent
- This was due to -1,800sqm of net absorption
- 90,141sqm of new stock is due to enter the market in 2023
- This will be followed by 147,357sqm in 2024
- 63,000sqm is due to come online from 2025 onwards
- A total of 398,163sqm of space is mooted
Key market indicators, Sydney CBD (aggregate)