Sydney’s CBD is experiencing weak office demand, causing vacancy rates to head towards 12% says Chris Nicholl of Commercial Sydney CBD. “Demand has softened generally but it is most noticeable postCOVID among large occupiers, and in particular in the Banking and Tech sectors,” explains Chris. “In response, the landlord market has moved to introduce significant leasing incentives and offer turnkey solutions to meet the needs of tenants.” According to Chris, these initiatives are stimulating a flight to quality buildings, with small and medium-sized enterprises being most active. The sales market continues to see transaction volumes that are below the long-term average, and this has seen values fall by 10% to 20% largely due to the increased cost of capital. Nevertheless, Chris says the Sydney market looks to hold significant opportunities for tenants and investors alike as we head into 2024. “We expect leasing incentives to remain at their current levels, with a continued period of lower capital transaction values, given the prolonged period of inflation and its impact on the cost of debt,” Chris says. Sydney CBD Office Industrial Retail Rents p/m² n/a Vacancy n/a Yields n/a Rates p/m² n/a Six-month market outlook Office Industrial Retail Rents p/m² $400-$2,200 n/a $500-$2,000 Vacancy 12% n/a 11% Yields 5.25-7.5% n/a 5-8.5% Rates p/m² $10,000-$30,000 n/a $10,000-$30,000 Current market conditions $1,360,000 Suite 502, 447 Kent Street, Sydney Recent Notable Transactions SOLD $100,000 p.a. Level 1, 100 Clarence Street, Sydney LEASED Chris Nicholl chris.nicholl@sydneycbd.rhc.com.au For more information, contact: 22 | New South Wales
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