Demand for office space in Sydney is currently twice its long-run average, with the outlook for the next six months remaining positive, according to Dexus Property Group.
In a note to investors, Dexus commented that the company’s Dexus Office Demand Barometer had registered 1.3 per cent in September 2016, easing 0.2 of a percentage point on the previous quarter, but still positive.
27,000 square metres were taken up through the month, bringing the running total for the year to 120,000 square metres, which the company said was spurred on by businesses taking on more human resources.
“We continue to see the strongest demand from smaller tenants requiring less than 1000 square metres of office space. Many of these tenants have been displaced from buildings withdrawn for the Sydney Metro rail project or for residential development,” commented Dexus general manager of research Peter Studley.
Mr Studley noted the number of buildings earmarked to be withdrawn from the office space market was “unusually high”, which combined with the constrained supply pipeline is likely to position Sydney for a reduction in vacancy and subsequently support a “significant lift in rents”.
“The positive read of the Barometer points to office demand continuing to track above trend for the remainder of the calendar year,” Mr Studley said.
“This is consistent with our forecast of net absorption averaging more than 66,000 square metres over the next three years.”