South Sydney is emerging as a prime target for office occupiers as the Sydney CBD vacancy continues to shrink.
The PCA Office Market statistics released last month highlight that the CBD office market remains tight with the vacancy rate of 3.9% near historic lows.
While Wynyard Place, Quay Quarter and the Circular Quay Tower developments will provide some much-needed supply, this will have a minimal impact on the CBD’s overall vacancy until the next major supply cycle post 2024 according to a new market analysis by CBRE.
In tandem, this is shifting the focus to alternate Sydney office markets according to CBRE South Sydney Director Brendan Shipp.
“The South Sydney market is quickly emerging as a pressure release valve for the Sydney CBD,” Mr Shipp said.
“Numerous development sites are available in Mascot, Alexandria and Green Square offering new office space at rents less than half the cost of the CBD. The area’s ongoing population growth and rail accessibility are underpinning tenant interest, with ABS statistics highlighting population growth of 45.12%, 17.19% and 164.38% in Mascot, Alexandria and Zetland respectively between 2011 and 2016."
Further population growth of approximately 30% is predicted in and around these areas between 2018 and 2026 according to GapMaps.
“Population growth has underpinned the rapid development of Green Square and the Mascot Town Centre, with developers leveraging off residential developments and associated amenity to plan for new office developments,” Mr Shipp said.
“Examples include Avenor’s development of Connex – an 18,000sqm office development on Kent Road in the Mascot CBD.”
The population growth is being supported by government infrastructure spending according to CBRE Office Leasing director Chris Fisher, with the WestConnex St Peters Interchange connecting to the M5, and the M4 East connecting to an interchange at Rozelle, with provision for a future connection to the Western Harbour Tunnel.
“Combined with the Gateway Project connecting to the International Terminal, accessibility and convenience to the Mascot CBD and the precinct will be greatly enhanced and traffic congestion will diminish,” Mr Fisher said.
Recent tenant moves to Mascot from both North Sydney and the Sydney CBD include TJ Maxx, Ascendas HCM, Probe Group and SICE, with other major commitments in the pipeline.
“Rumoured moves by a number of major corporates will lead the way for other like-minded businesses to consider South Sydney given the area’s competitive rentals,” Mr Fisher said, noting that office rents for new South Sydney developments were circa $650/sqm net compared to $1,200/sqm net for existing A-Grade building in the CBD.
“The ability to travel to the CBD in six minutes by rail, new road infrastructure, population growth, amenity and the multiple new projects in Mascot, Alexandria and Green Square that could be delivered in 2021 and 2022 at half the rental cost of the CBD are offering choice in a tight market.”
The PCA Office Market statistics released last month highlight that the CBD office market remains tight with the vacancy rate of 3.9% near historic lows.
While Wynyard Place, Quay Quarter and the Circular Quay Tower developments will provide some much-needed supply, this will have a minimal impact on the CBD’s overall vacancy until the next major supply cycle post 2024 according to a new market analysis by CBRE.
In tandem, this is shifting the focus to alternate Sydney office markets according to CBRE South Sydney Director Brendan Shipp.
“The South Sydney market is quickly emerging as a pressure release valve for the Sydney CBD,” Mr Shipp said.
“Numerous development sites are available in Mascot, Alexandria and Green Square offering new office space at rents less than half the cost of the CBD. The area’s ongoing population growth and rail accessibility are underpinning tenant interest, with ABS statistics highlighting population growth of 45.12%, 17.19% and 164.38% in Mascot, Alexandria and Zetland respectively between 2011 and 2016."
Further population growth of approximately 30% is predicted in and around these areas between 2018 and 2026 according to GapMaps.
“Population growth has underpinned the rapid development of Green Square and the Mascot Town Centre, with developers leveraging off residential developments and associated amenity to plan for new office developments,” Mr Shipp said.
“Examples include Avenor’s development of Connex – an 18,000sqm office development on Kent Road in the Mascot CBD.”
The population growth is being supported by government infrastructure spending according to CBRE Office Leasing director Chris Fisher, with the WestConnex St Peters Interchange connecting to the M5, and the M4 East connecting to an interchange at Rozelle, with provision for a future connection to the Western Harbour Tunnel.
“Combined with the Gateway Project connecting to the International Terminal, accessibility and convenience to the Mascot CBD and the precinct will be greatly enhanced and traffic congestion will diminish,” Mr Fisher said.
Recent tenant moves to Mascot from both North Sydney and the Sydney CBD include TJ Maxx, Ascendas HCM, Probe Group and SICE, with other major commitments in the pipeline.
“Rumoured moves by a number of major corporates will lead the way for other like-minded businesses to consider South Sydney given the area’s competitive rentals,” Mr Fisher said, noting that office rents for new South Sydney developments were circa $650/sqm net compared to $1,200/sqm net for existing A-Grade building in the CBD.
“The ability to travel to the CBD in six minutes by rail, new road infrastructure, population growth, amenity and the multiple new projects in Mascot, Alexandria and Green Square that could be delivered in 2021 and 2022 at half the rental cost of the CBD are offering choice in a tight market.”
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
