This article is from the Australian Property Journal archive
THE Sydney CBD office market has continued weaken, the vacancy rate increased from 9.3% to 9.6% — the second highest rate in the country, according to the Property Council.
The Office Market Report found over the six months to January 2012, net absorption was only 8,122 sqm.
Property Council NSW executive director Glenn Byres said Sydney has taken a short-term hit as the financial services sector feels the weight of global woes.
During the period, strong demand for A Grade stock totalled 50,972 sqm was offset by a fall in demand across all other grades. Supply additions in the past six months totalled 81,416 sqm – with 59,990 sqm withdrawn from the market.
The vacancy rate for Premium floor space rose from 2.5 to 7.4% – due largely to 29,090 sqm of additional supply. A Grade stock performed best with the vacancy rate falling from 9.9% to 8.9%. Demand dropped across the B Grade, C Grade and D Grade segments – though C Grade had a steady vacancy rate at 13.1%.
However CBRE Sydney office services senior director Jenine Cranston said the market has fared reasonably, all things considered.
“Since PCA’s last release of stats in mid 2011, we have seen only a negligible increase in total vacancy. This is despite almost nil financial services demand and a distinct lack of net take up of those groups who have relocated. The volume of enquiry in the legal sector was notable during 2011 but most firms were looking to consolidate and drive workplace efficiency rather than take additional space.
“It is also significant that the level of sublease vacancy has altered very little. CBRE’s Sublease Barometer indicates that as of December 2011 there was approximately 40,000 sqm of available sublease space, down fractionally on the total for Q2 2011. We are hopeful that the financial services sector which accounts for the largest quantum of sublease space, has limited contraction planned for 2012. Any large expansion in this area during 2012 would create the same pressures on direct lease stock as were evidenced in 2009,” Cranston said.
Byres said the supply pipeline over the next two years is modest and well below the historical average and just 45,279 sqm of refurbished stock is due to enter the market in 2012. Projects comprising 104,859 sqm are scheduled to be completed in 2013 with 51% pre-already committed.
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