Vacancies up but prospects good
Sydney Morning Herald
Saturday February 6, 2010
VACANCY rates on the lower north shore moved higher in the past six months due to weak demand for office space, according to the Property Council of Australia's latest Australian Office Market Report."Sitting at 13.7 per cent, up from 11.9 per cent, the story of the past year is a complete reversal of the trend from 2008, when North Sydney, in particular, bucked the trend and seemed immune from the effects of a slowing economy," said the NSW executive director for the PCA, Glenn Byres.However, there has been some good leasing activity in the past year, with Mirvac refurbishing and leasing out its former Optus building after the telco moved out to North Ryde.While office vacancy rates have risen across Sydney's north shore, the figures belie market conditions. A new market analysis from CB Richard Ellis says there are very few large spaces available.Property Council data shows the vacancy rate in Crows Nest/St Leonards has jumped from 12.9 per cent to 15.2 per cent in the past six months, but the North Sydney managing director for CBRE, Peter Flint, said much of the vacant space was attracting strong interest and a high percentage was under offer.In North Sydney, where the vacancy rate rose from 11 per cent to 11.7 per cent, Mr Flint said all of the newly developed office stock was substantially committed with only two options available for tenants seeking more than 5000 square metres."The figures are quite misleading and on the ground we're seeing a lack of new construction and a lack of options for larger space users," Mr Flint said."If you look behind the vacancy numbers in areas like St Leonards, much of the vacancy is in just two buildings - part of The Forum at 203 Pacific Highway and the Vodafone building at 207 Pacific Highway. The Vodafone space hasn't even been vacated yet and is already under offer ... and there is considerable interest in 203 Pacific Highway, which has only just been vacated."Chatswood has been the hardest-hit north shore market, with the vacancy there up from 13 per cent to 17.8 per cent.Mr Flint said there were some significant lease deals in the pipeline for Chatswood."The Chatswood doomsaysers are wrong; Chatswood will have its day and it's starting now," he said.While Reed Elsevier had reportedly been considering lease options outside Chatswood, it is believed to have committed to alternate Chatswood premises. In other commitments, Abigroup has taken 4500 square metres of space in the Zenith Centre, which is close to full occupancy."Competitive rents and incentives are spurring interest in the Chatswood market," Mr Flint said."It offers plenty of quality, good-sized floor plates, all close to the newly refurbished station, which is now fully integrated with the greater Sydney rail network following the completion of the Chatswood to Epping rail link."
© 2010 Sydney Morning Herald
