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Office markets in North Sydney and Parramatta are improving, new data shows.
The commercial markets in North Sydney and Parramatta both experienced strong rental growth during the second quarter, outperforming the Sydney CBD, according to new data from CBRE.
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The company reported that Parramatta experienced 4.9 per cent year-on-year growth, while vacancy for the total Parramatta market reached 7.3 per cent, down 2.3 per cent from last quarter. This was supported by positive net absorption for the last 12 months of just over 16,000 square metres.
Incentives came in at a much lower rate than the CBD, at 20 per cent, reflecting steady tenant demand for space, CBRE said.
North Sydney also saw a five per cent year-on-year increase in rental growth, CBRE reported, although 120,000 square metres of new stock in 2015/2016 is awaiting pre-commitment.
In the Sydney CBD office leasing market, rents declined slightly after another quarter of soft tenant demand. However, the current minimal supply pipeline is supporting this, and will continue to do so until 2015, with approximately 400,000 square metres of stock expected. Of this, 285,000 square metres of space will come from Barangaroo, which currently has good pre-commitment levels, CBRE said.
Since the start of the year, vacancy rates rose 1.7 per cent, to 8.9 per cent. While this is down 0.5 per cent from last year, CBRE said the quarterly increase reflects the uncertainty in the market as white collar employment growth weakens and business confidence remains low.
Prime effective rents are decreasing and as such, incentives are on an upward trend and now average 30 per cent.
