Need a large Sydney office? You’ve got four choices
Sections of Sydney’s office leasing market are so tight that tenants seeking more than 5000sqm of contiguous space can count their options on one hand.
CBRE senior director Jenine Cranston says tenants requiring 5000sqm of space with floor plates of 1000sqm or more face a critical shortage of choices, with just four assets currently available to them across the entire city.
The towers at the new Barangaroo development, the Darling Park 2 building, Wynyard Green and four floors at 175 Liverpool St are all that’s left when it comes to spaces that size, Cranston says, with a lack of new stock hitting the leasing market hard.
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“It’s not much, is it?,” Cranston says.
“Multiple 5000sqm tenants could get into there because there’s so much space, but there’s only these assets.
“There might be enough space for 10 or 15 tenants but maybe not, as well, depending on where those tenants sit in the stack of multiple floors.”
“There’s a very limited number and if tenants aren’t getting organised quickly, there’s well and truly more demand sitting out there.”
Cranston says it’s becoming increasingly difficult to find multiple office floors on consecutive levels within the same buildings.
“There might be others in the mix which are non-contiguous but I discounted them because most tenants want contiguous space and most of that size will also want to make a connection between the floors,” she says.
Cranston says other Sydney markets have traditionally provided relief when the CBD tightens up, but they are now feeling the pinch also.
“There’s no release valve from North Sydney anymore, because that’s a pretty tight market. What we’re going to see is more tenants moving back and forth across the bridge, just pouncing on any opportunities that arise,” she says.
While there are more options for B-grade stock, prices in that market skyrocketed more than 20% last year, eclipsing $1000 per square metre in some buildings.
There’s a very limited number and if tenants aren’t getting organised quickly, there’s well and truly more demand sitting out there
The news comes as prime office vacancy continues to drop Australia-wide, with Melbourne, Brisbane, Sydney, the Gold Coast all reporting tightening levels in the second half of 2016.
Even Perth, which has experienced ballooning vacancy rates since 2012, appears to be topping out, with vacancies increasing by just 0.7% in the six months to January.
Cranston says businesses may need to strike quickly when opportunities present, if they’re to secure the best possible tenancy.
“Tenants need to have a clear idea about the landscape out there in order to make informed decisions. Make timely decisions because it’s only going to become a more competitive landscape as time goes on,” she says.