This article is from the Australian Property Journal archive
THE pressure is on the Sydney CBD office market to absorb the new supply of space entering the market over the next two years.
The Property Council’s Office Market Report shows the lingering effects of the global financial crisis is continuing to bite with vacancy rates jumping from 7.8% to 8.1% — the highest level in four years.
This was a result of negative demand of 22,287 sqm for the six months to January 2010.
NSW acting executive director Glenn Byres said these figures show the Sydney CBD is still feeling the hangover from the global financial crisis.
“Negative demand was recorded in all grades except Premium, and across the City Core, Southern and The Rocks precincts.
“The headline vacancy rate of 8.1% was the highest since July 2006 – and up from 5.4% at the same time last year,” he added.
The report showed only modest supply entered the market over the last six months of 43,115 sqm of space and 51,954 sqm was withdrawn, but significant new supply is forecast over the next two years.
In 2010, the OMR forecasts 130,281 sqm of new space to enter the market, with a further 139,159 sqm in 2011. Tenant pre-commitments stand at 58% for 2011, but only 14% for 2010.
At the same time, the office space from the Barangaroo redevelopment is yet to be offered to the market and therefore is not yet included in the future supply forecasts in the OMR.
“All eyes will be on the future of the NSW economy and our ability to translate economic recovery into sustained growth,” Byres concluded.
Australian Property Journal
