Market
Intelligence

Market Dashboard

A collection of Research, Market Intelligence, News and Insights. Discover what's happening behind the scenes in the Sydney Office Leasing market and stay on top of emerging trends in commercial real estate.

Sydney
CBD

8.6%

Vacancy Rate

as at Jan-21

-113,346 sqm

Net Absorption

12 months to Jan-21

-11.8%

Rental Growth

A Grade gross effective, 12 months to Mar-21

28%-35%

Incentives

Indicative range, as at Mar-21

The arrows indicate the direction of Cadigal’s expected change over the next 12 months.

Vacancy
Rate

Source: Property Council of Australia

After coming within 0.1% of the lowest mark on record, the vacancy rate has risen almost 500 basis points in 18 months, to 8.6%.

The current vacancy rate is approximately at the long-term average but is expected to increase further as the supply cycle continues and demand remains muted.

Rents

Effective rents saw strong growth over 2016-2019, peaking at the end of 2019. They then fell sharply over 2020 as the pandemic resulted in the market grinding to a halt.

Source: Cadigal Research

Tenant Demand
Net Absorption

Source: Property Council of Australia

Tenant demand, as measured by net absorption, has been weak in the CBD since 2016 with an annual average of -20,086sqm over the last 5 years.

Additionally, the -113,346sqm of net absorption recorded over 2020 was the 3rd weakest annual result on record.

Supply Completions
2016-2025

107,729sqm of stock was completed over the 6 months to Jan-21, the most over a 6-month period in 4 years. As a result, total supply in the Sydney CBD is above 5.0mil sqm for the first time since Jan-19.

More supply is expected over 2021-2025, with 2024 expected to be the peak year.

Source: PCA/Cadigal

Tenant
Enquiry

Source: Cadigal Research

Tenant enquiry has seen a gradual improvement over the last 12 months (ignoring the Sep-20 spike, considered a COVID-driven anomaly).

Whilst the slight improvement is encouraging, the current quantum of enquiry is still below 2018 levels.

Tenant Enquiry
by Industry Sector

Reflecting the unusual current market environment, for the first time ‘undisclosed’ is the largest industry sector contributing to tenant enquiry (20.5% of the total, by area).

Financial Services was a close 2nd (20.3%) whilst Legal Services (3.2%) continues to be underweight relative to it’s CBD footprint.

Source: Cadigal Research

North
Shore

19.5%

Vacancy Rate

North Sydney, as at Jan-21

-16,506 sqm

Net Absorption

North Shore, 6 months to Jan-21

-21.2%

Rental Growth

North Sydney A Grade net effective, 12 months to Dec-20

33%-37%

Incentives

North Shore indicative range, as at Dec-20

The arrows indicate the direction of Cadigal’s expected change over the next 12 months.

Vacancy
Rate

Source: Property Council of Australia

The vacancy rate in North Sydney remained below 8.0% for over 5 years but more than doubled, to 19.5%, in H2 2020.

The spike was driven by substantial supply completions where committed tenants had yet to move, as well as market response to the pandemic.

Rents

Effective rents in North Sydney peaked in the 2nd half of 2019, and fell throughout 2020.

Prime stock has outperformed secondary, with Premium and A grade seeing smaller falls than B grade, thus far.

Source: Cadigal Research

Tenant Demand
Net Absorption

Source: Property Council of Australia

Net absorption has been weak across the North Shore, with -39,787sqm recorded over 2020 and -62,419sqm totalled over the last 5 years.

In fact, 10 of the last 20 years have seen negative net absorption on the North Shore.

Supply Completions
2016-2025

129,256sqm of office space was completed on the North Shore in 2020, predominantly in North Sydney.

Completions of new and full refurbishment projects will drop significantly over 2021-2025, with the 5-year total expected to be less than the 2020 figure.

Source: PCA/Cadigal

Tenant
Enquiry

Source: Cadigal Research

Tenant enquiry on the North Shore fell for a 3rd consecutive period, dropping 31% over the 2nd half of 2020 to 117,785qm.

North Shore enquiry levels have been on a downward trend over the last 3½ years with current enquiry down 52% on the Jun-17 total.

Tenant Enquiry
by Industry Sector

North Shore enquiry continues to be dominated by 3 industry sectors - Information Media & Telecommunications, Financial Services and Advertising Services - accounting for a combined 52% of the total.

Source: Cadigal Research

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Contact

Lok So

Research Director

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