Sydney CBD Office Market Performs Strongly
Sydney’s CBD strata and office market has performed strongly over the past year with low vacancies maintained while capital values have reached new highs, research by Ray White Commercial has found.
Vanessa Rader, Head of Research for Ray White Commercial, said during 2015 there were outstanding results for capital values in the CBD strata market despite a slight drop in the volume of sales.
“The current total average capital value is $6,237 per sqm which is 8.15 per cent up on the previous year and a significant increase of 22.48 per cent over the past two years,” Vanessa Rader said in the Between the Lines Sydney CBD Strata & Office Market Update, March 2016.
“During 2015 the average sale price increased to $845,000 from $770,000 during 2014, which is indicative of the large increase in value and the appetite from purchasers to buy larger or multiple suites rather than individual small suites, particularly given the cost of funding currently favourable.”
Vanessa Rader said capital values across all precincts in the Sydney CBD showed sound levels of growth during the 2015 calendar year.
“Core continues to be the most expensive CBD precinct and was up 2.0 per cent to $6,596 per sqm while Midtown and Western Corridor were $6,428 per sqm and $6,397 per sqm respectively,” she said. “The Southern precinct yielded the greatest increase in values, rising 21.26 per cent to $4,502 per sqm, however this is due to the reduction in values in 2014.”
Ray White Commercial Office Leasing Director, Anthony Harris, said the Sydney CBD has shown pleasing vacancy results by maintaining a 6.3 per cent rate despite large supply additions during late 2015 which has also fuelled the rental market.
“Looking to 2016 and beyond, it is unlikely this low vacancy situation will continue given the re-entry of refurbished space and the reshuffle of tenants across the CBD,” he said.
Ray White Commercial Office Leasing Director, Jeremy Piggin, said there were some dramatic changes by quality grade with large supply additions to the premium category resulting in a rise from 5.2 per cent in July, 2015, to the current rate of 8.1 per cent.
“B grade is the only other quality grade to have an increase over this period and is now 6.8 per cent, up from the 6.2 per cent recorded last period,” he said.
“The other quality grades have all seen good compression in vacations with A grade down to a tight 5.4 per cent, C grade at a 15 year low of 5.3 per cent, while D grade has continued downward to 4.2 per cent.”