Returning demand drives down Sydney office market vacancies
A continued recovery in demand has helped lower vacancy rates across the Sydney CBD commercial office market, according to the Property Council of Australia’s latest Office Market Report.
The vacancy rate across the CBD fell from 9 per cent to 8.4 per cent, in the six months to July 2014.
“The good news is demand was in the positive across the Sydney CBD market for the second straight period,” Property Council NSW Executive Director Glenn Byres said.
“Net absorption over the past six months totalled 23,983sqm – and was concentrated in Premium, A grade and B grade assets.
“Premium grade stock enjoyed the largest reduction in vacancy – dropping from 9.9 per cent to 8.2 per cent in the past six months. Only D grade saw an increase.
“Supply additions totalled 29,430sqm – and 35,948sqm of stock was withdrawn.
“The signs of life in the CBD office market are consistent with other data pointing to an improved economic outlook for Sydney and NSW.
“The most recent Property Council/ANZ Property Industry Confidence Survey shows sentiment in the NSW industry the highest in the nation.”
Future supply includes 56,575sqm in the second half of 2014, 214,0sqm scheduled for 2015 and 152,226sqm due to come online from 2016 onwards.
Analysis & Commentary, Sydney CBD, July 2014
Headline comments:
- Sydney CBD posted a decrease in vacancy in the six months to July 2014
- This was due to withdrawals and positive demand
- The lower grades of space experienced negative demand over the period
- There is a significant amount of space due to come online in 2015
Vacancy analysis:
- Vacancy in the Sydney CBD office market decreased from 9.0 per cent to 8.4 per cent
- This was due to 35,948sqm of withdrawals and 23,983sqm of net absorption
- 29,430sqm of space was added over the period
Premium:
- Vacancy decreased from 9.9 per cent to 8.2 per cent
- This was due to 7,698sqm of net absorption and 6,000sqm of withdrawals
A Grade:
- Vacancy decreased from 9.8 per cent to 9.5 per cent
- This was due to 14,625sqm of withdrawals and 4,696sqm of net absorption
- 15,256sqm of space was added over the period
B Grade:
- Vacancy decreased from 8.3 per cent to 7.6 per cent over the period
- This was due to 22,431sqm of net absorption and 2,062sqm of withdrawals
- 14,174sqm of space was added over the period
C Grade:
- Vacancy decreased from 7.8 per cent to 7.1 per cent
- This was due to 11,825sqm of withdrawals
- Net absorption was -6,991sqm
D Grade:
- Vacancy increased from 6.7 per cent to 7.9 per cent
- This was due to -3,851sqm of net absorption
- 1,436sqm of space was withdrawn over the period
Future supply:
- 56,575sqm of new stock is due to enter the market in the second half of 2014
- 214,0sqm of projects are scheduled to be completed in 2015
- 152,226sqm is due to come online from 2016 onwards
- A total of 49,000sqm of space is mooted
Key market indicators, Sydney CBD (aggregate)
| Grade | Vacancy, Jul 14 (%) | Vacancy, Jan 14 (%) | Net absorption, 6 months to Jul 14 (sqm) | Net absorption, 12 months to Jul 14 (sqm) |
| Premium | 8.2 | 9.9 | 7,698 | 16,549 |
| A | 9.5 | 9.8 | 4,696 | 13,484 |
| B | 7.6 | 8.3 | 22,431 | 25,776 |
| C | 7.1 | 7.8 | -6,991 | 3,882 |
| D | 7.9 | 6.7 | -3,851 | -2,419 |
| Total | 8.4 | 9.0 | 23,983 | 57,272 |
Media contact
Glenn Byres
NSW Executive Director
02 9033 1904 or 0419 695 435
John Nguyen
National Research Manager
02 9033 1943 or 0410 449 210
For more information, visit www.propertyoz.com.au/officemarketreport