Real estate service company CBRE estimates around 180,000 square metres of office stock will be removed over the next four years as the residential conversion of buildings picks up.
Suburbs such as Epping, Burwood, Hurstville, St Leonards and North Sydney have been identified by CBRE as locations likely to see the largest conversions from office to residential space.
“Over the long term we expect smaller suburban office markets such as Epping, Burwood and Hurstville to transition to predominantly residential hubs, while the North Shore markets will maintain a core office function, with increased residential activity outside of the core,” CBRE analyst Megan Pryor said.
“Limited greenfield sites are available in these areas, which has led to a notable number of office buildings being sold to residential developers,” Pryor said
Managing director of buyers’ agency Propertybuyer, Rich Harvey said while the trend of conversion is something to keep an eye on, it won’t neccesarily be a positive for investors.
“It’s certainly a trend that’s happening and it’s a good thing in terms of supply for property buyes but there’s another question as to whether it will be good for investors,” Harvey said.
“You need to look at the existing market in those suburbs, a suburb like Epping has just had a lot of land rezoned and doesn’t really have a lot of office stock to convert anyway.”
With the difference in going price for residential space compared to office space, Harvey said he can understand why buildings are being converted.
“If you look at the average square metre price in North Sydney it might be $6,000-$8,000 for residential compared to $13,000 for a residential square metre, in St Leonards it’s probably $6,000 for office and $12,000 for residential so you can see why these building are being converted.
“Area’s like North Sydney and St Leonards, it would probably lead to a bit of a gentrification and revitalisation of the area as well.
“After 7pm there’s not much really happening there, but if you bring in more residents, that’s going to bring more nightlife and elements like that as well.”
CBRE estimates up 60,000 square metres of office stock could go in Norh Sydney over the next five years, while St Leonards is expected to lose around 38,000 square metres.
