The vacancy rate across the Sydney CBD market dropped to 5.6 per cent in the 6 months to July 2016 down from 6.3 per cent in January. This is due to development activity in buildings such as 1 Alfred Street, which has required over 130 tenants to vacate as the building owner (Wanda Group) seek to redevelop the site commencing 2017.
In addition, the compulsory acquisition of 55 Hunter, 5 Elizabeth, 39 Martin Place and 175 Castlereagh Street for the Sydney Metro train stations is forcing more tenants into the market. Also the highly anticipated Brookfield development site at 301 George Street, and 71 Macquarie Street owned by Macrolink Australia who are looking to convert to residential.
This unprecedented supply withdrawal and resultant demand has continued the upward pricing pressure on the A and B grade office market.
At 28 OConnell Street Ray White Commercial agents Jeremy Piggin and Elizabeth Braithwaite have secured office rents of $985sqm to $995sqm gross for the new owners Coombes Property Group who purchased the building from Chubb for $94 Million in November 2016. Mr Piggin struck a whole floor 484sqm deal with Jobadder at a rent of $985sqm. This is a significant increase in rental by comparison to $760sqm gross achieved in the building in 2015.
At 4 Martin Place Ray White Commercial Agents Anthony Harris and Jeremy Piggin have assisted a financial services firm sub lease a 226sqm suite at a rental of $820sqm gross, a significant rent increase from $575sqm gross effective being paid under the head lease. The incoming subtenant, E5 Workflow, is currently occupying space at 1 Alfred Street and is one of many tenants needing to relocate by December 2016.
At 50 Margaret Street Anthony Harris and Jeremy Piggin have secured 6 lease transactions totalling over 2,500sqm for Singaporean owners Rockworth Capital, with rents of up to $950sqm gross being achieved. Of the transactions in the last few months two were whole floor deals of approximately 700sqm each. Bridges Lawyers secured Level 2 at $765sqm, also coming out of 1 Alfred Street. And Aconex secured Level 7 at $825sqm. Aconex are exiting 181 Miller Street, North Sydney which is a government acquired building for the Sydney Metro Rail.
Future Sydney CBD Office Supply: