Office vacancy is stable but demand for premium space remains strong.
CBD office vacancy has edged slightly higher to 11.4% from 11.3%. However, Sydney is a two-speed market with premium grade office space highly sought after.
Look beyond vacancy rates for the true picture – office utilisation is still low
There’s a lot of office space that is under-utilised… and often more or less empty! Many office tenants would relinquish their space if the opportunity arose. Which means there is plenty of opportunity for tenants… if they work with an independent tenant representative who can access all office space – even if it isn’t advertised in the open market.
Office-based hybrid working is the new normal, but each company is different
We are seeing more people coming back to the office, but there are no clear trends – each company is handling return to the office in their own way. This means space planning – deep analysis to determine a company’s optimal office space solution – has never been more important.
Tenants want flexibility – “third spaces” are highly regarded
To accommodate flexible working, tenants needing <1,000 SQM are looking favourably on buildings offering “third spaces” – communal spaces, beyond the tenancy, which workers are free to use e.g. larger meeting rooms, chill out lounges, rooftop gardens, and outdoor balconies.
Premium space remains keenly sought after
The “flight to quality” continues, increasing demand for premium grade office space, particularly below 1,000 SQM. Also, many landlords have done spec fit-outs in the hope of attracting tenants, which means finding unfitted premium space can be especially hard.
Not all movers are downsizing – some have outgrown their office fit-outs
Some companies are choosing to relocate into smaller, better-quality premises, often without paying more rent. But other companies are relocating because their office fit-outs no longer meet their business needs. Also, a fresh new fit-out and location incentivises workers to come back to the office.
Vacancy rates
Sydney CBD – 11.4%
Chatswood – 17.1%
North Sydney – 19.5%
St Leonards – 27.0%
Macquarie Park – 17.0%
Parramatta – 23.0%
Source: TRS Research
To find out how TRS can get you the best deal on your next lease renewal or office relocation, please contact us.
