Sydney office stock shrinking under increased demand: HTW
The Sydney office market is experiencing increased demand for non-traditional and traditional office space, according to the latest report from Herron Todd White (HTW).
The office market in Sydney has grown over the last 12 months as a result of increased demand for good investment assets, growth in rental income, stock reduction and generally lower vacancy rate, said the report.
The valuation firms suggests large amounts of office stock have been removed either temporarily or permanently from the market.
The main reasons being residential conversions and redevelopment in the inner city.
Office stock withdrawals are set to outweigh new supply over the next 24 months, it forecast.
There has been an accompanying uplift in prices, an increase in rentals and a tightening of yields over the past 18 months in the North Western office markets, such as Chatswood, Macquarie Park and Norwest as well as other key office locations such as North Sydney (above) and Parramatta.
Demand remains strong for good quality office space in the North Western office markets.
There is new development is centred around Parramatta, Norwest and Macquarie Park with improvements in infrastructure and continued growth of demand driving the market.
These areas have substantial new office developments underway or in the planning stages meaning more offices will be on the market from next year onwards.
Opportunities in emerging office markets also exist in other areas of Sydney.
The commercial centre of Liverpool is thought to be benefiting from the continued residential development in the southwest, proposed construction of the Badgerys Creek Airport and the extension of the Sydney Metro.
Areas that remain in demand and popular with owner occupiers and tenants are the inner city and city fringe areas such as Surry Hills, Alexandria, Woolloomooloo and Pyrmont.
The update concluded the outlook for Sydney’s office market looked "positive" for 2018 as demand continues to drive the market for both traditional type offices and more non-traditional options.
