Eight new office projects to be completed in Sydney CBD by next year

These projects will add a total of over 212,100sqm to the city’s stock.

According to a JLL report, Sydney CBD recorded positive 3,900 sqm of net absorption over the first quarter of 2023. The positive demand over the quarter was driven by centralisation activity from the North Shore and South Sydney markets, the expansion of flexible space groups, as well as small tenant (<1,000 sqm) leasing activity. 

This positive result was counterbalanced by consolidation activity as well as sublease space being offered to the market from the finance, education and professional services sectors. 

Here’s more from JLL:

The Sydney CBD office supply pipeline remains strong with eight projects totalling 212,100 sqm under construction, reflecting 4.1% of the total CBD stock. These developments are expected to be delivered between 2023 and 2024. These developments have achieved an aggregated pre-commitment rate of 33%. The majority of the developments are located in the Core precinct (60% or 126,729 sqm).

There were zero completions and one withdrawal totalling 12,600 sqm recorded over Q1 2023. Sydney CBD office stock totals at 5.2 million sqm.  

Investment in the Sydney CBD was quiet over Q1 2023, with no major transactions (> AUD 5 million) recorded. Over the last 12 months, Sydney CBD investment volumes totalled AUD 2.17 billion with 11 assets transacting. 

Prime gross effective rents in the CBD increased 1.6% over Q1 2023 (5.2% y-o-y). The main driver of this growth was an uplift of gross face rents increasing 2.7% over the quarter, whilst prime incentives marginally increased 0.3 percentage points (pps) to 34.8%. 

The prime vacancy rate has decreased to 14.3% over the quarter while the secondary vacancy rate decreased to 12.6%. Overall, the headline vacancy rate has decreased to 13.7%.