Sydney CBD office vacancy rate inches up to 12.2% in H1 2024

Large occupiers are moving outside of the city.

Negative net absorption over H2 2023 of -64,600 sqm (latest figure from PCA) has been driven by large occupiers moving outside of the Sydney CBD according to Colliers, in addition to sublease space added from Salesforce (7,700 sqm) and AMP (3,600 sqm). 

As a result, vacancy increased, albeit minimal, by 0.7 percentage points to 12.2% with the prime core precinct remaining one of the tightest pockets at 9.0% vacancy. 

Here’s more from Colliers:

In a positive sign, gross leasing activity over H1 2024 is 20% above H1 2023 due to an uplift in activity from +3,000 sqm tenants, as well as consistent activity from SMEs who are on average expanding their office footprint when relocating.

Different speeds of rental growth across different pockets of the Sydney CBD remains a consistent theme over Q2. Average prime net face rents across the overall market increased by 0.6%, largely driven by a 1.9% increase in premium grade Midtown rents after a period of stagnant growth compared to the Core. The Core precinct continues to outperform the wider Sydney CBD market with average prime net face rents increasing by 4.4% YoY followed by the Midtown precinct at 3.9%. Incentives remain under upward pressure but have remained largely stable over Q2 averaging 37% for prime grade and 35% for B-grade.