Sydney to add over 150,000sqm of new office space in 2022

Gross face rents are still at $1,355 sqm per annum on average.

According to Jamie King, National Director, Office Leasing at Cushman & Wakefield, Sydney CBD’s flight to quality remains key with Premium stock high in demand.

“The first two weeks of 2022 saw approximately 30 new briefs in the market with requirements totalling circa 18,000sqm, a positive sign for the year ahead.

“Existing quality fit outs and new build fit outs are the key focus for tenants, as opposed to refurbished suites. Working from Home pressures continue along with a fight for talent, resulting in tenants keen to place make their new office providing reason for a return from staff.”

Here’s more from Cushman & Wakefield:

CBD Office: Slightly more than 150,000 square metre (sqm) of new and refurbished space is anticipated to come online in the Sydney CBD over 2022. Leasing activity remained solid and rents generally stable in Q4 2021. 

The average Prime grade incentive remains at 35% and gross face rents continue to average $1,355 sqm per annum (pa). Although the Omicron variant has increased the downside risk to this forecast in the short term, barring further economic restrictions growth may be pushed back into the second half of 2022.

Metro Office: Rental conditions in Sydney office markets have stabilized to a degree after a period of weakness caused by the COVID-19 pandemic. Incentives remain elevated and continue to drift higher across most submarkets. Tighter conditions are beginning to emerge in some pockets of the market, such as North Sydney Prime. 

After more than 300,000 square metres (sqm) of new office space hit Sydney metropolitan office markets during 2020 and more than 200,000 sqm during 2021, only 120,000sqm of new supply is set to hit the market over the next 24 months.