A LIMITED supply of quality properties and the decentralisation of workers from the city has provided a fillip for suburban office markets, according to new research.
Although pockets of sluggish growth and high vacancies in some outer regions and along the north shore remain, demand is in general outpacing supply.
The conversion of older office towers into apartments in the north and within the tightly held south Sydney corridors has underpinned the growth in occupancies. This has also had a knock-on benefit for other assets, such as new bars and restaurants, to cater for the new office-worker demand.
The property at 5-9 Roslyn Street, Potts Point, is on the market and tipped to attract investors keen on the area for its office workers. Named the ”Barcelona” building, it won the Sir Arthur G. Stephenson Award for commercial architecture in 2010.
The selling agent, Matt Hudson, of Oxford Commercial, said the gentrification of Potts Point, with the development of Hampton Court and Mansions hotels by Toga, had attracted strong demand from investors.
Hudson said Potts Point had the most dense population in Australia.
This has been boosted by new office tenants such as those in the former Westfield Towers at 100 William Street, who use Potts Point for dining.
”Given the trading volume of the area, there has been strong demand from investors to secure prime assets in the tightly held precinct,” he said.
According to the Colliers International Sydney Metropolitan Office Research & Forecast Report, Sydney’s metropolitan office market vacancy rate fell by 0.24 of a percentage point in the past six months to reach 8.16 per cent by the end of the third quarter this year.
The national director of office leasing, Sydney, at Colliers International, Robert Gishen, said the two factors responsible for the decline in the vacancy rate were positive tenant demand and a lack of vacant supply entering the market.
”High-quality assets, in particular, have continued to attract strong demand and inquiry from tenants, and the ongoing lack of vacant prime-grade space has led to a number of markets experiencing face rental growth, as well as a tightening of incentives,” Gishen said.
”The suburb of St Leonards experienced the largest decline in the vacancy rate, falling by 2.3 per cent to 10.7 per cent as of July 2012. This was followed by North Ryde, with a 1.5 per cent decline to 6.7 per cent.”
The research manager at Colliers International, Mathew Tiller, said a continuing fall in the vacancy rate would lead to growth in A-grade face and effective rents, with most tenant demand continuing to focus on high-quality space.
”The lack of new supply and tight vacancy is also expected to see tenants continue to consider and move into suitable options within the Sydney CBD market,” Tiller said.
”This provides an opportunity for landlords with secondary-grade assets across Sydney’s metropolitan markets to upgrade their stock to capture the current tenant demand in the tight A-grade market.”
This story Administrator ready to work first appeared on Nanjing Night Net.