Sydney Office Space Rentals

was reported in the Sydney Morning Herald on December 1, 2007 the following:

As vacancy tightens and rental prices increase in Sydney’s CBD, the city fringe office market is becoming an increasingly popular destination for small businesses, in particular for owner occupiers looking to solve their accommodation problems through their own investment.

According to Colliers International, the Inner West has become a particularly attractive location for small creative businesses because of the special nature of the commercial office spaces available in the area, and the proximity to the CBD and home.

Josh Watts of Colliers says there is a total of 261,000 square metres of commercial office space in the city fringe market.  The vacancy rate for A grade space is 4 per cent.  For B grade space it is closer to 10 per cent.

After the big increase in the first half of the year, net face rents across all grades in the CBD fringe had remained steady since July as tenant demand eased, Mr Watts said.

Net rents for the A grade market were between $380 and $500 a square metre, and net rents in the B grade market were between $350 and $420.

Net rental rates across all grades in the CBD fringe were expected to plateau in the first half of next year as tenant demand caught up with the strong rental rises, which happened in the first half of this year, he said.  Mr Watts said incentives had fallen in the CBD fringe market since last year, but they had remained relatively stable across all grades this year.

This report was reviewed as we approached year end 2009.  So what has happened in the past two years?  According to Timothy Green of Tim Green Commercial, there has been a deterioration in rentals to the extent of 10-25 per cent.  Vacancies are up approximately 3-5 per cent and incentives are up between 10 and 30 per cent.

What does this mean to the office fitout and office interior business?  According to Alan Green of OMG Projects, office fit out costs have decreased by approximately 10 per cent.

Remarkably, quality standards have increased.  OMG is quality assured according to ISO 9001/2000.  The current standards of office interiors is higher today than every before.  No doubt this is a result of increased incentives offered by landlords.

Alan Green says, this is a good thing and quality finishes in office fitout will probably remain high, going forward.