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City office rents skyrocket

Property Markets / Outlook

Australia / Sydney

Apr 15 2018

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The average rent for city offices has increased to more than $1000 per square metre, per annum, thanks to low vacancy levels. 

In Sydney, rents have risen up to $1500 per square metre in some cases, with in Melbourne it’s close to $700 per square metre. 

In Melbourne there are 12 office developments under construction, with another three expected to proceed in the next five years, including Two Melbourne Quarter, a 25-storey, 50,000 square metre Docklands tower and 180 Flinders Street, an A grade development opposite Federation Square.

Cushman & Wakefield research shows one third of Sydney’s vacant space is premium grade, with remaining vacancy at just 4 per cent.

Along with increased rent, incentives declined from 21 per cent to 2 per cent in Sydney, supporting a gross effective rental increase of 2.9 per cent over the quarter.

In the B-grade market, gross effective rents increased 1.9 per cent, quarter on quarter, to $753 per sq m per annum with incentives about 18.5 per cent.

The research showed that in Melbourne CBD, the vacancy rate of just 4.6 per cent is the lowest since 2008, with new leases being signed at higher levels.

Photo by Jeremy Bishop on Unsplash

 

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