Blog - TGC News
TGCONNECT | DECEMBER 2017 + MARKET WRAP
As we come to the end of another year, we’d like to take the opportunity to provide a commercial market update on our latest sales and leasing results, as well as provide some highlights on the state of the commercial leasing market in the Sydney CBD.
Over the past year, business expansion and stock withdrawals have seen Sydney’s office grade vacancy rate drop to approximately 3.8 per cent (projected to be 4.1 per cent as of 1 Jan 2018), and even tighter in the A and B Grades.
The vacancy rate for office space is predicted to tighten even further over the next few years amid rising stock withdrawals. The trend towards flexible workspaces and space utilisation is also expected to reduce floor space ratios (FSRs), negating the need for larger spaces by some tenants.
Some sizeable buildings were removed from the market over the past twelve months, including:
- 55 Hunter Street (13,622m²)
- 175 Castlereagh Street (11,919m²)
- 71-79 Macquarie Street (9,198m²)
- 140 Sussex Street (12,042m²)
- AMP Buildings at Circular Quay
- 39 Martin Place
Despite the introduction of some new stock, including International House Sydney at Barangaroo and Investa’s Barrack Place at 151 Clarence Street, supply will continue to contract over the next 24 months with approximately 300,000 sqm of space scheduled to be permanently withdrawn.
The A-grade market has experienced steady rental results and leasing performance, with rental growth still trending upwards at around 15 per cent.
Secondary rents have also risen by around 20 per cent. However, as the rents for these spaces continue to increase, more and more B-grade occupants looking for space in the city are reporting that it is relatively more affordable to upgrade to A-grade stock. Demand from tenants seeking suites has also weakened, resulting in more evenhanded tenant/landlord negotiations.
OUR YEAR AT TGC
2017 was a busy year for the sales, leasing and property management teams at TGC. In this video update, TGC General Manager, Steve Printezis, shares some of our highlights over the last 12 months.
- 112 Castlereagh Street, Sydney – A $59 million freehold building opposite Westfield Sydney was sold by Danny Condell
- 24-30 Springfield Ave, Potts Point – A retail strata space was sold to the existing tenant, Harris Farm, for $11.75 million by Eric Lundberg and William Shen
- 822 George Street, Chippendale – A freehold building close to Broadway sold for $15.5 million by Scot Robertson
- 219 Cleveland St Redfern – 15,000 sqm of space was leased to various businesses, including Trip Advisor, Isentia and multiple government departments @ $650 per sqm
- 451 Pitt Street, Sydney – 1145 sqm of office space was leased to Study Group by Hamish Mackay @ $750 sqm
- 5/11 Harris St, Pyrmont – A heritage asset occupying the former CSR sugar mill was leased by Eric Lundberg to various businesses @ $595 per sqm
TGC was appointed as managing agents for following assets:
- 100 Christie St, St Leonard’s – 10,000 sqm close to the train station
- Chester Square Shopping Centre – an asset that was recently sold to Hold Mark
- 4 Sirius Road Lane Cove – where we saw a fantastic fit-out completed by Carlile Swimming School
The team at TGC are looking forward to another busy and successful year in 2018. We’d like to thank all our partners and wish you a safe and happy festive season and a fantastic start to the new year.
As always, we are here for any of your commercial property needs and are still seeing some fantastic opportunities for tenants and owners. So, if you’re looking to sell, lease or manage your property, please don’t hesitate to get in touch.