There are new developments, currently under construction, that will add 9% of much-needed new supply to the North Shore office market by the end of 2020. Proposed developments over the new Metro stations at North Sydney and Crows Nest plus other site consolidations help to ensure the supply pipeline remains filled beyond 2020. Tenant demand rebounded over the last 6 months, with positive net absorption in all three precincts.
Positive net absorption and falling stock levels resulted in vacancy rates declining over the last 6 months. Despite fluctuations from period to period, vacancy rates in all three precincts have been on a generally downward trend since 2010 and are all, currently, below their respective long-term averages.
Effective rental growth across the North Shore continues to be strong. Relatively even contributions of face rental growth and incentive contraction has seen gross effective rents rise in the 9%-20% pa range across the precincts and building grades.
Looking ahead, the pick-up in tenant demand is expected to continue on the back of robust enquiry levels and the arrival of new stock. Higher net absorption will drive further falls in vacancy rates, despite the supply increases, and fuel further growth in effective rents, albeit at a slower pace.