Split in demand for office stock on North Shore

Demand for commercial office stock across the North Shore is divided between high and low quality assets, according to the Property Council of Australia’s latest Office Market Report.

“Across the North Shore, demand for A and B Grade stock remains in the positive, but slipped into the negative for C and D Grade buildings,” says Property Council NSW Executive Director Glenn Byres.

“In the six months to July 2012 demand remained particularly strong for A Grade stock, with 10,057sqm of net absorption, as well as 554 sqm of net absorption of B Grade stock.

“Overall, the vacancy rate across the North Shore office market rose from 9.1 percent to 9.4 percent in the six months to July 2012.

“Across the sub-markets, the North Sydney vacancy rate rose from 7.0 percent to 7.4 percent, with 2642 sqm of additional supply and net absorption of -2285 sqm.

“Vacancy in Chatswood rose from 10.7 percent to 13.7 percent, largely due to 14,428 sqm in new supply and 4326 sqm of additional demand.

“The Crows Nest/St Leonards market saw 4638sqm of net absorption and 4025sqm of withdrawals lead to a cut in the vacancy rate from 13 percent to 10.7 percent.”

Mr Byres says 17,664 sqm of additional space is due to enter the North Shore market in the second half of 2012, but only 550 sqm is due for completion within 2013.  

Headline comments:

• Vacancy for the overall North Shore market increased over the period
• The increase was due to supply additions
• The upper grades of space experienced positive demand with the lower grade experiencing negative demand

Vacancy analysis:

• Total vacancy for the North Shore increased from 9.1 percent in January 2012 to 9.4 percent in July 2012
• The vacancy increase was due to 17,070 sqm of supply additions, countered by only 6,679 sqm of net absorption and 4,025 sqm of withdrawals
• The upper grades of space (A & B Grade) experienced positive demand and have single digit vacancy
• The lower grades of space (C & D Grade) experienced negative demand and are in double digit vacancy territory

North Sydney:

• North Sydney vacancy increased from 7.0 percent to 7.4 percent over the half year to July 2012
• This was due to 2,642 sqm of supply additions and -2,285 sqm of net absorption

Crows Nest / St Leonards:

• Vacancy decreased from 13.0 percent to 10.7 percent
• This was due to 4,638 sqm of net absorption and 4,025 sqm of withdrawals

Chatswood:

• Vacancy in Chatswood increased in the 6 months to July 2012 from 10.7 percent to 13.7 percent
• This was due to 14,428 sqm of supply additions, the highest since January 1996
• Net absorption of 4,326 sqm was recorded over the period

Future supply:

• A total of 17,664 sqm of stock is due to enter the North Shore market in the second half of 2012
• 550 sqm of projects are due to be completed in 2013
• 95,155 sqm of space is due from 2014 onwards
• 148,109 sqm is mooted

Key market indicators, North Shore (aggregate)

Key market indicators, North Shore (by locale)

Future supply, North Shore (by locale)

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

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