Sydney falls behind in office space race
Parramatta was the only working city to see an uptake of office space. Picture: NCA NewsWire / Damian Shaw
Sydney is slipping behind other major cities across the country as the only location where office demand fell, as vacancies increased.
A recent release by the Property Council of Australia showed that supply has increased in many regions, bolstered by a growth in population – particularly from people migrating interstate.
Interstate migration favoured Queensland and Western Australia over the past six months, with the employment market and demand for commercial accommodation reducing vacancies to 14 per cent.
This is a positive step from the 15.4 per cent vacancy rate in January earlier this year.
Perth and Adelaide have also had similar luck, with West Perth recording a reduction in vacancy rates from 22.1 per cent to 15.3 per cent in the past 18 months.
Sydney’s CBD market has faltered as the other markets have grown, with only 21,692 sqm of stock being absorbed in the six months to July 2022 – resulting in vacancies growing by 10.1 per cent.
Ray White Commercial’s Head of Research Vanessa Rader said that vacancies are expected to continue increasing as tenants evolve into hybrid office models.
The Sydney CBD is still recovering from lockdowns, with many businesses now adopting a hybrid working structure. Picture: Alex Coppel.
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“With premium quality stock on offer and high incentives, the CBD has been instrumental in attracting tenants from suburban markets,” Ms Rader said.
“Vacancies have increased across the North Shore, collectively now representing 19 per cent, the highest recorded since 1993.”
“Parramatta was the only market to buck the trend among its NSW counterparts, recording a positive take up of 7,327 sqm – with completions and supply still to be added as vacancies grew by 19.3 per cent.”
“While CBD markets such as Brisbane, Perth and Adelaide all feature relatively high vacancy rates, their improvements have been encouraging compared to more traditional east coast office markets.
“This trend is one to continue to watch over the next couple of years.”
Sydney was ranked the 19th most expensive city for office spaces in the world.
As remote work continues to grow in popularity, office spaces continue to remain essential for workspace culture.
New data from Point2 analysed the office spaces in desirable business districts in the US and compared them with international offices in the most expensive cities in the world.
It found that Sydney ranked 19th on the list, with costs of $64 per square metre.
London topped the list as the most expensive city in the world for office space, reaching $181 per square metre per year.
Meanwhile Manhattan in New York came in as the most expensive office space in the US, ranking 6th in the world.
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