Strong tenant demand returns to North Shore

Vacancy rates across the North Shore’s office markets have dipped to the lowest level in three years, according to the Property Council of Australia’s latest Office Market Report.

“Across the North Shore, net demand increased by 9,083sqm in the six months to January 2012 and the vacancy rate fell from 11.5 percent to 9.2 percent,” says Property Council NSW Executive Director Glenn Byres.

“A big influence on the result was the withdrawal of 29,572sqm of stock from the market, which is more than three times the 20-year average.”

“However, strong demand for A Grade space in the North Sydney locale has also been a significant factor in the decline in vacancy.”

"Net absorption in North Sydney rose by 16,708sqm during the period, pushing the vacancy rate down from 9.2 percent to 7.2 percent.”

“In fact, the A Grade segment has done well across the entire North Shore market. Net absorption for this segment totalled 7,665sqm in the six months to January, and the A Grade vacancy rate dropped to 7.7 percent.”

“The B Grade segment also posted positive net absorption for the period, but demand was negative for C Grade and D Grade space over the period.”

“The Crows Nest / St Leonards locale did not fare as well as North Sydney, posting net absorption of -9,176sqm for the period.”

Mr Byres says 31,556sqm of additional space is due to enter the North Shore market in 2012, but no projects are due for completion within 2013.

Contacts: Glenn Byres, NSW Executive Director, 02 9033 1904 or 0419 695 435
John Nguyen, National Research Manager, 02 9033 1943 or 0410 449 210 

Headline comments: 

• Vacancy for the overall North Shore market decreased over the period 
• Vacancy is now at its lowest level since July 2008 
• The reduction was mainly due to above-average levels of withdrawals 
• All grades of space experienced vacancy decreases.

Vacancy analysis: 

• Total vacancy for the North Shore decreased from 11.5 percent in July 2011 to 9.2 percent in January 2012 
• This is the lowest vacancy since July 2008 
• The vacancy reduction was mainly due to 29,572sqm of withdrawals, which is more than three times the 20-year average 
  
• The vacancy reduction was also due to net absorption of 9,083sqm 
• 1,944sqm of space was added over the period 
• The upper grades of space (A & B Grade) experienced positive demand and vacancy decreases over the period 
• The lower grades of space (C & D Grade) experienced negative demand and vacancy decreases over the period

North Sydney: 

• North Sydney vacancy decreased from 9.2 percent to 7.2 percent over the half year to January 2012 
• This was due mainly to 16,708sqm of net absorption which is almost six times the 20-year average 
• The vacancy reduction was also partially attributable to 1,349sqm of withdrawals

Crows Nest / St Leonards: 

• Vacancy increased from 12.5 percent to 13.0 percent despite significant withdrawals of space totalling 9,785sqm 
• The vacancy increase was due to net absorption of -9,176sqm and 1,183sqm of supply additions

Chatswood: 

• Vacancy in Chatswood decreased in the six months to January 2012 from 17.0 percent to 10.7 percent 
• This was due to mainly to withdrawals of 18,438sqm 
• Net absorption of 1,551sqm was recorded over the period

Future supply: 

• A total of 31,556sqm of stock is due to enter the North Shore market in 2012 
• No projects are due to be completed in 2013 
• 130,649sqm of space is due from 2014 onwards 
• 122,155sqm is mooted

Key market indicators, North Shore (aggregate)

Key market indicators, North Shore (by locale)

Future supply, North Shore (by locale)

For full analysis and coverage, visit the dedicated website: www.officemarketreport.com.au