Blog - TGC News

10 December 2018


Another calendar year is about to bite the dust. Here’s how Sydney performed over the last 12 months.


Average rental rates for A-Grade spaces in the Sydney CBD have continued their strong long-term growth pattern, increasing by just under 8% in 2018. This is slightly lower than the double-digit increases of the previous two years.  Nevertheless, Sydney CBD office rates are still easily the highest in Australia.

CBD rental yields currently sit just under 5%, which is a slight fall from 12 months ago, but still a healthy return.  

There’s been a significant increase in B-Grade CBD office rent rates over the past year. They’ve grown by nearly 30%.

In the broader Sydney office market, A-Grade premises in Parramatta have been the standout performers, with average rent increases of more than 15% during the last year, yielding around 5.5%.

North Sydney has been another consistent performer. Average rent rates for A-Grade space have increased by about 10% there, providing a yield of just over 5%.

A busy highway in North Sydney looking back to the CBD

Capital growth

Capital growth rates of about 30% have been achieved for office space in Parramatta in 2018 as it continues to redefine itself as Sydney’s “second CBD”.

Macquarie Park has also been a stellar performer with growth rates of just under 30%, followed by North Sydney (about 20%) and the CBD (just over 10%).

Vacancy rates

Low vacancy rates are helping to drive the continued strong rent and capital growth rates in Sydney. Current vacancy rates in key areas are:

  • just under 4% in the Sydney CBD (well below the national CBD average of about 10%).
  • just under 8% in North Sydney
  • less than 3% in Parramatta
  • about 6% in Macquarie Park.


There has been a slight decrease in office stock availability in the Sydney CBD and Macquarie Park areas in 2018, while levels have remained reasonably constant in both North Sydney and Parramatta.

Future outlook

The outlook for 2019 and beyond remains bright in the Sydney office market. Current employment levels and professional job advertisements are both very strong, which should continue to be reflected in healthy demand for office space.  

Other factors that are likely to continue to influence the Sydney office market include:

  • the increasing demand for flexible co-working spaces. Owners should stay aware of and respond to this competitive threat through introducing more flexible lease terms and strategic repositioning of older buildings.
  • reduced Asian investment due to tighter restrictions being imposed in recent years by the Foreign Investment Review Board.

Two men laughing together in a coworking space

Our year at TGC

Vacancy rates have been tight over the last couple of years, but, this year, we’ve also seen enquiry levels for available space flatten. This is largely due to the Sydney Metro project where a number of buildings were withdrawn from the market approximately two years ago. Here, hundreds of tenants had to vacate buildings, relocate and absorb available office space.

This has, in turn, thrown out the natural vacancy cycle for small-to-medium businesses and the need for tenants to relocate over the last 12 months, drastically slowing enquiries.

Despite this trend, it has been another positive year at TGC. Some notable transactions include:


  • Approx 9,000 sqm at 80 Pitt Street to Macquarie Bank with another floor currently under offer
  • Four floors circa 1,300 sqm with another three floors circa 1,000 sqm under offer at 222 Clarence Street, Sydney. We expect the building to be ready early Q1 2019, fully leased.
  • Lease approximately 200 sqm of space at 122 Buckingham Street to Our Friends Electric
  • Retail space at 53 Burwood Road, Burwood, which leased for approximately 1,200 per sqm


  • Approximately 692 sqm of office space at Level 11, 97-99 Bathurst Street, Sydney  (with 3 parking spaces) sold for $8.5million – a record sale price for the building
  • The sale of the iconic blue building at 461 Cleveland Street and 24 Little Cleveland Street Surry Hills, which recently sold after Auction for $3.6625 million
  • A great suite at 43 Bridge Road, Stanmore for circa $9,600 per sqm
  • Suite 4, 26-32 Pirrama Road, Jones Bay Wharf, Pyrmont which sold prior to Auction for 12,650 per sqm

Pyrmont at sunset

Date: 10 December 2018 Author: Adam Hennessy
TGC News

About the author:

Adam Hennessy

Adam Hennessy has been involved in the Sydney commercial real estate industry for over 16 years and is Director of Office Services at TGC. After owning Ray White Commercial Sydney Leasing, Adam joined TGC in January 2007 with a mandate to grow TGC’s office services portfolio.

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