Market
Pulse
The Sydney CBD and North Sydney office markets are showing early signs of recovery as tenant demand firms. In the CBD, positive net absorption was recorded for a fourth consecutive half-year, with the two-year total of 86,606sqm the highest in nine years. Vacancy edged down from a 31-year high to 13.3%, though it remains more than 400 basis points above the long-term average. Premium net effective rents have surpassed pre-pandemic peaks, while A and B grades still trail theirs. North Sydney recorded 1,965sqm of positive net absorption over H1 2026, the first back-to-back positive half-years since July 2019. North Shore vacancy eased from a 36-year high of 25.4% to 25.2%.
Market
Dashboard
Sydney
CBD
13.3%
Vacancy Rate
as at Sep-26
18,715
Net Absorption
6 months to Jul-26
5.1%-6.2%
Rental Growth
A Grade net effective, 12 months to Jun-26
30%-42.%
Incentives
Indicative range, as at Jun-26
The arrows indicate the direction of Cadigal’s expected change over the next 12 months.
Vacancy Rate
The overall vacancy rate edged down from 13.8%, a 31-year high, to 13.3% over the first half of the year. Despite the fall, the vacancy rate is still high, being more than 400 basis points above the long term average of 9.2%. With total supply remaining effectively static over the first half of the year, the reduction in vacancy rate was driven by the small but positive net absorption recorded in the period.
Rents
Sydney CBD face rents grew between 5.1%-6.2% over the 12 months to Jun-26. These growth rates were higher than the previous quarter and were led, marginally, by Premium grade after slower growth in Q1. A wide range of incentives across building grades and locations continues in the Sydney CBD office market. As a result of some tightening in Premium incentives, less for A grade and effectively none in B grade, growth rates for effective rents in Premium (8.7%-10.1%) were higher than for face rents, marginally higher for A grade (5.3%-6.3%) but similar in B grade (5.4%-6.0%).
Net Absorption
For the first time since Jan-19 the market saw positive net absorption for four consecutive half-years with 18,715sqm recorded over the 6 months to Jul-26. Additionally, the two-year total of 86,606sqm is the highest in nine years (since Jul-17). Across the CBD precincts, Western Corridor (13,491sqm) led the way over the last 6 months and was slightly ahead of the Core (12,329sqm). However, over longer periods (1, 3 and 5 years) the Core continues to substantially outperform all other precincts.
Supply
There is currently 5.38 mil sqm of office space in the Sydney CBD, the largest office market in the country. Three new office developments remain under construction – Atlassian Central (57,500sqm office NLA) due to reach practical completion by the end of 2026 to be followed by Chifley South (52,125sqm) in Q2, 2027 and then 55 Pitt Street (61,604sqm) in Q4, 2027. Together, the three buildings will add another 3.2% (171,229sqm) to total stock.
Tenant Enquiry
The total quantum of active tenant enquiry remains above average despite easing down 1.4% to 353,105sqm over the quarter. However, excluding the abnormally large Westpac requirement (80,000- 100,000sqm) underlying active enquiry remains subdued. Recent large enquiries to emerge in the market include law firms Norton Rose (7,000-10,000sqm for 2029-2031) and Dentons (3,500-4,500sqm for Jul-28), Woolworths Group (6,000-10,000sqm for mid-2028) and NTT (3,200-4,200sqm for Jul-28).
Enquiry by Industry
North
Shore
25.9%
Vacancy Rate
North Sydney, as at Jan-26
-1,246
Net Absorption
North Shore, 12 months to Jan-26
-3.2%
Rental Growth
North Sydney A Grade net effective, 12 months to Dec-25
38%-47%
Incentives
North Shore indicative range, as at Dec-25
The arrows indicate the direction of Cadigal’s expected change over the next 12 months.
Vacancy Rate
Following the completion of a partially committed Victoria Cross Tower, vacancy rates in the major North Shore market (25.4%) each rose to their respective highs (in 36 years of records). In North Sydney, mild net absorption of 1,514sqm of new supply, with the vacancy rate rising 430 basis points. In the absence of new supply, equally mild net absorption in Chatswood saw the vacancy rate fall 170 basis points to 18.5%. Chatswood has had the lowest vacancy rate on the North Shore since January, 2022 albeit the smallest precinct (accounting for 17% of total stock).
Rents
Face rental growth continued across the North Shore over 2025 with 12-month growth between 4.2% and 7.0%. Growth was stronger in North Sydney, followed by Crows Nest / St Leonards and then Chatswood. Across building grades, growth was led by Premium rents followed by A grade with B grade marginally lower.
Net Absorption
Positive net absorption of 8,030sqm was recorded across the North Shore over H2, 2025, the highest six-month total since H2, 2020. Additionally, each of the three precincts (North Sydney, Crows Nest / St Leonards and Chatswood) tallied positive net absorption, for the first time since H1, 2018. Although the H2, 2025, total was positive, it wasn't enough to cancel out the H1, 2025, result leading to a slightly negative total (-1,246sqm) for the year.
Supply
Victoria Cross Tower in North Sydney (55,315sqm office NLA), the only major office development under construction on the North Shore, was completed in Q4, 2025. With no office projects remaining under construction and no commencements expected in 2026, the market is not expected to see new office supply until 2029, at the earliest.
Tenant Enquiry
Active tenant enquiry for the North Shore remained above the 8-year average (of 172,149sqm) over H2 2025, despite falling 18% (or 44,347sqm) to 200,468sqm. Total enquiry was comprised of 160 requirements, the most in 8 years.
Enquiry by Industry
