Sydney CBD Strata Office Market Commentary
(Standard Edition)
2008 Research by Belinda Nowland
n
Savills have recorded approximately $992m worth of
office transactions (>$5m) in the year to June 2008 in
the Sydney CBD area. This is down 19.3% from $1,230m in
the previous year, and down on the five year average of
$1,850m. During the same period 17 properties were sold,
down from the previous year of 22, and down on the five
year average of 25. The CBD has only had two sales >$5m
since December 2007.
n
Market yields in the Sydney CBD as at June 2008
typically range between 5.75% and 6.25% for A Grade
buildings, and between 6.25% and 6.75% for Secondary
Grade buildings. The average yield for A Grade office
for the quarter to June 2008 was 6.00%, representing a
0.375 basis point fall over the 12 months prior.
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The latest Property Council of Australia numbers have
shown a slight increase in the vacancy level to 4.3% on
the back of a number of refurbished buildings coming
back onto the market.
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Net Face rents in the Sydney CBD as at June 2008
typically range between $550/sqm to $850/sqm pa net for
A Grade buildings, and between $400/sqm and $550/sqm pa
net for Secondary Grade buildings. The average A Grade
rent was $700/sqm pa net, representing a 21.7% increase
over the 12 months prior.
n
Savills previously forecast the 2007 to 2011 years to
show strong growth in effective rentals. The continued
strength of this growth going forward will be slightly
dampened (but still relatively strong compared to 2004 –
2006) as businesses in the Property and Financial
Services sector exercise caution when committing to new
leases. Furthermore, the market experienced stronger
growth than anticipated during the second half of 2007,
thereby bringing forward effective rental growth we had
forecast for 2008.
n
Sydney CBD’s fundamentals have not changed significantly
from late 2007, however the increased cost of debt due
to the collapse of the US sub prime mortgage market and
increased interest rates caused investors to proceed
with caution during the first half of 2008. We
anticipate a softening of investment parameters over the
remainder of 2008.
For
the latest market information, please contact one of the
following agents.
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Chris Freeman
Director - Capital Strategy
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Ben Azar
Executive - Capital Transactions
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| Direct Line: |
+61 (2) 8215 8824 |
| Direct Fax: |
+61 (2) 8215 8899 |
| Mobile: |
0416 282 292 |
| Email: |
bazar@savills.com.au
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