2024-10-16-莱坊-North_Shore_Office_Market_September_2024_9页_1mb

North Shore Office Market Analysis Summary

North Sydney

• Vacancy: Prime vacancy decreased to 16.5%, total market vacancy 23.5% (down from 20.5%).
• Absorption: Positive net absorption of 15,366 sqm in H1 2024, highest in three years.
• Rental Growth: Prime net face rent increased 1.7% y/y to $909/sqm.
• Incentives: Average cash incentive 38%. High incentives ($503/sqm net effective rent) due to competition.
• Disconnect: No prime stock additions y/y. Next development (Victoria Cross OSD) in 2025 (55,000sqm).
• Trends: Strong demand for highest-quality assets (occupancy >97%). Sydney metro improves connectivity.
• Yields: Prime yield softened 111bps y/y to 6.9%.

Macquarie Park

• Vacancy: Prime vacancy decreased to 19.9% (21.0% YoY).
• Absorption: Positive net absorption of 15,484 sqm (prime), supported by refurbishment (9,300sqm).
• Rental Growth: Prime net face rent increased 2.8% y/y to $465/sqm.
• Incentives: Prime incentives elevated to 38%.
• Structure: Largest market by stock (prime grade stock: 945,349sqm, 41% of market).
• Developments: Lendlease's Victoria Cross OSD (2025), M_Park at Khartoum Road (2025), Affinity Place (DA approved 2028).

St Leonards

• Vacancy: Highest market vacancy at 26.5% (up from 20.3%).
• Absorption: Negative absorption (-2,362 sqm H1 2024) as secondary market suffered most.
• Rental Growth: Limited ($659/sqm prime net face rent, +0.8% YoY).
• Trends: Secondary market vacancy rose to record high 30.2%, connection to Crows Nest metro improving appeal.

Chatswood

• Vacancy: Prime vacancy increased to 25.1%, total vacancy 20.6% (up 1.8% YoY).
• Absorption: Negative net absorption (-4,759 sqm H1 2024), driven by occupier relocations (e.g. Lenovo).
• Rental Growth: Stagnant prime rentals at $631/sqm.
• Trends: No significant upcoming developments. Market remains challenging.

Overall Trends

• Flight to Quality: Strong demand for premium assets contrasts significantly with weak secondary and tertiary grades.
• Connectivity: Infrastructure projects (metro) improving appeal of North Sydney, Crows Nest station boosts St Leonards.
• Investment: Activity subdued since 2023 due to uncertainty. Deal flow expected to increase H2 2024 as yields reset and market sentiment improves.
• Risk: Future supply projects (e.g. 2028 developments) mean current stock levels are largely at risk of vacancy.