News & Media
SYDNEY CBD OFFICE MARKET by Gregory May
Whilst I am not an authority on the CBD office market, I am astounded to see the current spate of demolition and new construction which is happening in the Sydney CBD at the moment.
The construction of the Sydney Metro undoubtedly took a good deal of stock out of the market, as well of the demolition of Gold Fields House and Macquarie Street buildings for residential development. Although, we had been led to believe that decentralisation of office activity to locations such as Macquarie Park, Parramatta, Liverpool , Norwest and Rhodes, was going to take the pressure of the Sydney CBD office market and the existing public transport infrastructure. Apparently, this is not the case. Demand for CBD offices remains strong.
It would also appear that business is now demanding a better class of office accommodation. Bigger floor plates, higher energy efficiency rated buildings, more in house facilities, such as cafes, child care, breakout areas, gyms, bike storage areas etc.
The recently reported lease negotiations at 60 Martin Place of $1800 per square metre per annum, would seem to support the current level of confidence in new development. It would now appear that upper level space is commanding higher rental than ground floor areas in some locations, which is certainly a turnabout. Traditionally, ground floor spaces have attracted at least double the rents of upper floor locations.
The development of Barangaroo and the King Street Wharf Precinct has and will add considerable new stock to the market, although there appears to be no problem with the uptake.
An interesting flow on from the demolition of aged stock and rising rents in new stock is a renewed interest in purchasing existing Strata offices. As far as I am aware there has been little new Strata stock added to the market in recent time, so occupiers wanting to control their overheads and secure their future are apparently keenly eyeing up existing Strata offices.