Blog - TGC News
TGCONNECT | OCTOBER 2016
TAKE A LOOK AT SOME OF OUR LATEST RESULTS HERE
CBD MARKET UPDATE
It’s been a big quarter in commercial property! We’ve seen a strong continuation of capital flow and positive net absorption through Sydney’s office market, which confirms the city’s position as Australia’s investment destination of choice. Sydney’s B-grade leasing markets are becoming increasingly competitive due to office withdrawals and consequent tenant displacements. The metro line has started and will continue to suck a total of 57,370sqm of space from Sydney’s B-grade market by the first half of 2017. White-collar businesses have also increased their headcount by nearly 9% in a year. This means vacancy rates are currently as low as 3.8%, which for only the second time in 15 years has been below 4%.
B-grade stock recorded the highest increase in effective net rent this quarter, standing at 15.7%. The average prime yield range remained between 5-6% for a consecutive third quarter. It appears that Sydney CBD valuations and yields are stabilising. Low interest rates and high competition will see Sydney retain its strong investment status.
CITY FRINGE UPDATE
The city fringe market mirrors the CBD market and is characterised by low availability of quality stock. Commercial rents are increasing and incentives are reducing quickly, particularly for creative style premises. The conversion or redevelopment of older commercial buildings to residential stock has also limited access to quality supply. Rental ranges have increased to $650-$700/sqm per annum for good office space.
VIEW OUR LATEST RESULTS HERE.
The Sydney CBD office market has ultimately turned in favour of the landlord who have aggressively increased rents and are decreasing leasing incentives as vacancy rates plummet. This means that in time, demand will outweigh supply putting further pressure on vacancy rates and rents through to 2019! The recently released Central Sydney Planning Strategy, which allows an increase in building height restrictions and a compulsory allocation of retail and commercial space in new residential towers over 55 metres, will hopefully free up space in the long term.
Looking for some expert advice for your commercial property? Our team of experienced
sales & leasing agents would be more than happy to have a chat. Give us a call on
1300 458 800.