market overviews

record low vacancy rates

 

 

Sydney Metropolitan

As the CBD market continues to tighten and face rents continue to increase, Sydney’s metropolitan markets will benefit as more tenants are likely to consider alternative options to the CBD to meet their accommodation requirements.

Sydney’s overall metropolitan vacancy rate has remained relatively stable since mid 2007, only increasing marginally from 9.2% to 9.4% as at January 2008. Sub-markets such as North Sydney, Norwest and Rhodes have witnessed an increase in vacancy due to an influx of new supply. In contrast, markets such as St Leonards, North Ryde and Sydney Olympic Park have seen sharp reductions in vacancy due to strong leasing activity. However, despite the minor increase in the overall vacancy rate, a number of sub-markets are expected to see vacancy levels reduce during the year as new supply is absorbed.

In 2007 strong demand driving a flight to quality, tightening vacancy and brand new 'A Grade' supply entering the market caused net face rental growth of 5-10+% on average across a number of metropolitan office markets. North Sydney in particular has seen net face rental growth in the order of 10 – 20% since mid 2007 as a result of the introduction of new, high quality 'A Grade' stock entering the market. Face rental growth will likely continue amongst the top end brand new supply in 2008 with the strongest rental growth predicted to be in the CBD Fringe markets, followed by North Sydney, St Leonards and Parramatta.

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