Demand for office space started improving 2 years ago and has been steadily
For the year to July our leasing teams in North Sydney and Chatswood have leased more than 1 1,000 sqm of offices a level that is 32% up on last year and 97% higher than 2 years ago. Increased tenant demand takes time to feed through to lower vacancy rates. We noted 2 years ago that demand was starting to rise and saw this in both the amount of space being leased and a steady increase in the number of “Active
Tenants” looking for space.
The continued rise in commercial prices has prompted a number of long term owners to sell into the market and they have been rewarded with results that would have been unheard of 2 years ago.
Until recently the strongest demand for commercial property came from developers looking for buildings that could be redeveloped into the booming residential market. While this demand still exists there are fewer properties now available that have the zoning and height limits that would make redevelopment viable.
As a result the sales market is now being led by demand for investment, longer term development and owner occupation. The fact that the leasing market is improving is adding further fuel to already strong demand.
With continued low interest rates it is little surprise that commercial values have maintained the strong growth seen in 2014 and have jumped higher again in the first half of 2015 Demand for all forms of commercial property is high and those owners that have been happy to sell have had no shortage of buyers competing for the opportunity.
The real surprise in the market has been the continued improvement of the leasing market. We have been reporting for 18 months that leasing activity across the North Shore is strong and the first half of 2015 has seen this continue. Our leasing teams across North Sydney and Chatswood have completed more than 11,000 sqm of lettings in the first 7 months of 2015 an increase of over 30% compared with the same period last year and almost double the level of 2 years ago.