2025-12-18-莱坊-Sydney_economic_rents_reach_their_peak_2025_9页_1mb

报告摘要

Summary of Sydney CBD Economic Rents

Core Content

The Sydney CBD office market is currently experiencing a significant disparity between economic rents and forecast rents, which is constraining new development feasibility. Economic rents have surged to $2,130/sqm (net face rent), required for a new premium office tower to be viable in Q3 2028, while forecast rents are expected to reach $1,690/sqm under a 3% annual growth assumption. This creates a 26% gap, indicating that new developments are unlikely to proceed in the near term.

Main Views

Economic Rents Have Surged: Since Q1 2021, economic rents have increased by 89%, far outpacing the 17% growth in current market rents. This rise is attributed to a combination of factors including increased construction costs, higher interest rates, elevated yields, and increased incentives.
Construction Costs Have Risen Sharply: Construction costs for a new premium tower in Sydney CBD have increased by 50% from $6,587/sqm (GFA) in Q1 2021 to $9,877/sqm in Q3 2025. This includes a 70% increase in material costs and a 17% rise in labour costs.
Interest Rates and Yields Impact Feasibility: The RBA raised interest rates significantly from 2022, increasing funding costs and making development more challenging. Yields in Sydney CBD prime office assets have also increased, from 4.4% in 2021 to 6.00% in 2024, but are expected to compress by 25 bps in Q3 2025 and further by 75 bps by Q1 2028, which would lower economic rents.
Incentives Have Increased: Landlords have increased incentives to secure tenants, which have doubled from 18% to 36% (gross) since Q2 2019. This has significantly impacted net effective rents, which have only increased by 3.0% since Q1 2021.
Development Pipeline is Constrained: The development pipeline for new Sydney CBD office supply is thinned out, with no new schemes under construction expected to complete beyond 2027. Supply additions are projected to average 52,000 sqm per year over the next five years, which is almost a third of the average seen in the past decade.
Halo Tower is the Next Major Development: The Halo Tower (42,000 sqm) is expected to be the next new construction project in the Sydney CBD, potentially starting in late 2026 and completing in 2030. It is anticipated to have strong demand due to its core location and smaller floor plates.
Supply Shortage Will Drive Rent Growth: With limited new supply, rent growth is expected to accelerate, particularly for existing premium and A-grade assets. Net effective rents are forecast to grow at 6.6% p.a. from Q4 2025 to Q4 2030, well above the 10-year average of 4.1% p.a..
Economic Rents Are Expected to Fall: Economic rents are projected to fall to $1,900/sqm by late 2026 and stabilize in 2027. The gap between economic and forecast rents is expected to narrow as yields compress and forecast rents rise.
New Development Feasibility Likely in 2028: Economic rents are expected to fall below forecast rents by 2028, making new developments feasible. This implies that a new premium office tower may not be completed until 2031 due to the three-year construction period.
Developers Will Focus on Core Areas: To increase the chances of viability, developers are likely to focus on core CBD locations where rents are higher and yields are tighter. Suburban markets and less central CBD precincts may see a longer delay in new supply.
Refurbishment May Be an Alternative: In response to development constraints, developers may turn to refurbishing existing assets as a more cost-effective way to provide new options for tenants.
Investor Focus Shifts to Stabilised Assets: With development becoming less viable, investors are likely to shift their focus to stabilised assets and core-plus investments that require less capital expenditure.

Key Information

Current economic rent: $2,130/sqm (net face rent)
Current forecast rent: $1,690/sqm (net face rent)
Gap between economic and forecast rent: 26%
Construction cost increase: 50% from Q1 2021 to Q3 2025
Yield compression forecast: 75 bps by Q1 2028
Economic rents peak: Q1 2025 at $2,230/sqm
Next development: Halo Tower (42,000 sqm), expected to start in late 2026
Supply pipeline: No new developments expected to complete beyond 2027
Rent growth forecast: 6.6% p.a. from Q4 2025 to Q4 2030
Feasibility of new development: Likely to become viable in 2028, with completion expected in 2031

Conclusion

The Sydney CBD office market is currently in a development drought, driven by high economic rents and low forecast rents. This imbalance is expected to persist until 2028, when yield compression and rising forecast rents may bring economic rents in line with market expectations. Developers and investors are likely to adjust their strategies, focusing on core areas and stabilised assets, with refurbishment becoming a more viable option. The Halo Tower is anticipated to be the next major development, signaling a potential shift in the market landscape.

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