Blog - TGC News

04 April 2019

TGConnect March 2019 Market Wrap

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The first quarter of 2019 has flown by. Here’s the current state of play in the Sydney commercial office market.

Rental Rates

Average gross rental rates for A-Grade office premises in the Sydney CBD are by far the highest in Australia. At 1,270/m2, they easily exceed the average rates of Australia’s second most expensive CBD market (Melbourne, $780/m2).

However, Sydney CBD net rental yields are currently just under 5%, which is slightly lower than what you can get in the CBD markets of Australia’s other major capital cities:

  • Melbourne 5%
  • Brisbane 5.9%
  • Canberra 6.25%
  • Perth 6.9%
  • Adelaide 7.25%   

B-Grade CBD gross office rent rates are averaging $1,100/m2, which again is far higher than the rates for comparable premises in other Australian capital cities.

In the broader Sydney office market, the average gross rental rates and net yields for A-Grade space are:

  • North Sydney $980/m2, yielding 5.25%
  • Parramatta $670/m2, yielding 5.5%
  • Macquarie Park $485/m2, yielding 5.75%

A road in the Sydney CBD that goes under a bridge

Capital Growth

Capital values might be falling in the Sydney residential property market, but that’s not the case in Sydney’s commercial office market. Capital growth rates of about 15% have been achieved for A-Grade office space in North Sydney over the past 12 months, followed by Parramatta (11%), and the Sydney CBD (6%). Values have remained flat in the Macquarie Park market.  

Vacancy Rates and Stock

The generally strong rent and capital growth rates being achieved in the Sydney office market are being driven by low vacancy rates and generally low stock availability.

Vacancy rates are currently:

  • just over 3% in Parramatta.
  • about 4.5% in the Sydney CBD (well below the national CBD average of about 9%).
  • just over 6% in North Sydney.

There has been a slight decrease in office stock availability in the Sydney CBD, North Sydney and Macquarie Park markets over the past 12 months, and a slight increase in Parramatta as that market continues to redefine itself as “Sydney’s second CBD”. Pockets of smaller suites are becoming more prevalent as landlords seek to get them leased.  

People crossing a street in Sydney CBD surrounded by office buildings

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Future Outlook

Strong employment levels should continue to fuel both tenant and buyer demand for office space in the Sydney commercial office market in 2019. Other trends that will continue to have an influence on the market include:

It will also be interesting to see the effects on the commercial real estate market if Labor wins the election and moves to abolish negative gearing by January 1, 2020.

How TGC Can Help

Our team at TGC has over 25 years of experience in the Sydney commercial office market. We can help you to buy, sell, lease or manage your commercial office space.

Contact us today to find out how we can help you!


Source: Statistics for this article were sourced from

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Date: 04 April 2019 Author: TGC Writer
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About the author:

TGC Writer

TGC is the largest privately owned commercial real estate agency in the Sydney CBD, with over 20 years experience servicing the CBD, City Fringe and greater Metropolitan property market. We’re committed to assisting you with your total property needs, including buying, selling, leasing and property management.

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