Circa 70,000 sqm of refurbished office space is expected to be completed in 2023. Image – Canva.
  • Cushman & Wakefield reveal a 2.9% quarter-on-quarter uplift in Sydney
  • Prime net effective rents rose from $930 to $960 per sqm
  • New office space supply is expected to be more subdued in 2023 following, a busy 2022

Prime gross effective rents continued to push higher across most of Australia’s CBD office markets but Sydney led the pack in the first quarter of 2023; Cushman & Wakefield’s quarterly Office Marketbeat reveals a 2.9% quarter-on-quarter uplift in Sydney.

This shift sees prime net effective rents rising from $930 to $960 per sqm.

New and high-quality office buildings flooding the market boosted rents in Sydney during the quarter according to the Office Marketbeat. This along with an increased share of premium-grade buildings in the prime basket.

This trend contributed to a 6.9% increase in effective rents over the rolling year, which included a 7.7% growth in face rents.

On average, the gross face rents for premium, A-grade, and B-grade office spaces are $1,645, $1,360, and $1,085, respectively.

Prime gross effective rent, overall vacancy (6 monthly)

Source: PCA; Cushman & Wakefield Research

Cushman & Wakefield’s Head of Research Australia and New Zealand, Dominic Brown explains that in Q1 prime CBD office rents continue their upward trajectory in most markets across Australia, with Sydney “setting the pace in the new year”.

“While demand for office space in Australia’s largest office market remains stable, the time between inquiry and decision is being extended.”

“Tenants are more discerning given the uncertain economic conditions, and incentives remain higher as a result.”

Supply pipeline

The supply of new office space is expected to be more subdued in 2023 following, a busy 2022.

More than 205,000 square metres (sqm) of new and refurbished space came online in the Sydney CBD over the course of the year.

That said, approximately 70,000 sqm of refurbished office space is scheduled to be finished in 2023, with the majority reaching completion in the second half of the year.

Supply pipeline: new developments & major refurbs

Source: PCA; Cushman & Wakefield Research

While there are no major new developments set to be finished in 2023, several are anticipated to be completed in the first quarter of 2024. These include 1 Elizabeth Street (NLA 72,500 sqm, 83% pre-committed) and Parkline Metro North (NLA 48,000 sqm).

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