The Sydney office market is going from strength to strength, with constrained supply placing upward pressure on net effective rents in the city’s metro office markets, according to Colliers International’s latest Metro Office Research and Forecast Report.
Suburban peripheral markets are described as being “impacted by residential encroachment,” while tenant demand for lease space in the core metro office markets of North Sydney and Parramatta are growing.
“Infrastructure and amenity investment has contributed to an uplift in rent and competition for space amongst occupiers, especially within core metro markets, and it’s likely that this will continue throughout the construction process to completion,” Colliers International said.
Up to 2,400 white collar workers have been added to Parramatta’s booming office market over the last 12 months, and the lack of new supply has helped make the suburb’s total vacancy one of the lowest nationally, according to Alex Brown, director of office leasing at Colliers International.
“With the vacancy rate in the first half of 2017 at 4.3 per cent, and A Grade vacancy remaining at zero percent, tenants have been faced with limited choice. This has resulted in landlords being able to achieve increased net effective rents throughout 2017,” she told The Urban Developer.
Moving forward, Colliers International expects the Sydney CBD market to tighten further over the next two years, driving positive rental growth even further for landlords.
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