> **来源：[研报客](https://pc.yanbaoke.cn)** # Sydney CBD # Office Market H1-2026 Strengthening occupier market in the core CBD has driven significant rental growth. Click here to subscribe # Key Insights Investors and occupiers continue to prioritise quality assets in amenity rich locations. Marco Mascitelli Director, RESEARCH & CONSULTING # 8.9% # Premium vacancy Premium vacancy has declined from $13\%$ to $8.9\%$ over the last two years. # 314K Five year premium grade net absorption Premium grade stock has outperformed over the last five years, specifically in the core precinct, driving overall absorption levels across the CBD. # 163k Sqm of premium supply under construction Total premium office space under construction between 2026-29 in Sydney CBD, with limited available space to lease. # 450k # Sqm occupier briefs Occupier enquiry has been healthy with over 450,000sqm of active tenant briefs tracked over the last 12 months, underpinning strengthening demand. # 8.2% Rental growth in the core Prime net face rents have grown by $8.2\%$ in the core over the year, the strongest level of growth across all precincts. # \$3.3bn 2025 transaction volumes Transactional activity over 2025 was driven by both offshore and domestic capital. Sydney CBD Office Market Indicators – January 2026 <table><tr><td>Grade</td><td>Total Stock sqm</td><td>Vacancy Rate %</td><td>Annual Net Absorption sqm</td><td>Annual Net Additions sqm</td><td>Average Gross Face Rent $/sqm</td><td>Average Incentive %</td><td>Net Effective Rent Gth % y/y</td><td>Core Market Yield %*</td></tr><tr><td>Prime</td><td>3,577,029</td><td>13.2%</td><td>90,555</td><td>100,973</td><td>1,651</td><td>35.6%</td><td>7.1</td><td>5.70%</td></tr><tr><td>Secondary</td><td>1,808,086</td><td>14.9%</td><td>-68,898</td><td>-16,420</td><td>1,196</td><td>35.4%</td><td>3.3</td><td>6.25%</td></tr><tr><td>Total</td><td>5,385,115</td><td>13.8%</td><td>21,657</td><td>84,553</td><td></td><td></td><td></td><td></td></tr></table> Source: Knight Frank Research / PCA * assuming WALE 5 years # Core premium drives demand # STRENGTHENING DEMAND IN THE OCCUPIER MARKET There has been solid signs of strengthening demand in the occupier market with overall absorption levels for 2025 positive, with 21,657 sqm recorded. This was the second consecutive year of positive absorption recorded, highlighting the improved leasing momentum and strengthening demand environment. The absorption levels have been driven by strong demand in the premium market with 59,330 sqm recorded over the year. The secondary market continues to highlight the stark contrast between best in class assets and the rest of the market as negative absorption of 68,898 sqm was recorded over 2025. Tenant enquiry has remained elevated, with more than 450,000 sqm of active requirements tracked over the past 12 months, providing a solid foundation for improving market conditions and sentiment. Recent leasing activity has been supported by several notable commitments, including John Holland (5,000 sqm at 210 Sussex Street), M&C Saatchi (1,148 sqm at 25 Martin Place) and the NSW Government (4,400 sqm at 252 Pitt Street). Financial services and professional services tenants continue to underpin demand, accounting for $35\%$ and $25\%$ of total deal volumes respectively in 2025, while the CBD Core captured $58\%$ of leasing activity. The ongoing flight to quality is driving occupiers towards high-grade buildings that offer strong transport connectivity and integrated amenity, reinforcing demand for premium core locations. # CORE PREMIUM STOCK CONTINUES TO OUTPERFORM THE WIDER MARKET Despite the positive absorption levels, overall vacancy measured $13.8\%$ as at January 2026. A large influx of new supply over the last 18 months, has totalled over 270,016 sqm has hindered vacancy levels, despite positive demand. The level of occupied stock has increased by $0.5\%$ over the year, one of its highest levels in nearly a decade. By grade, premium vacancy tightened from $36\%$ to $8.9\%$ over the last two years, reflecting sustained demand for higher-quality assets. In contrast, secondary vacancy remains elevated at $14.9\%$ . Sublease vacancy has declined to $0.6\%$ , its lowest level since 2019. Over the past five years, the structural flight-to-quality trend has become increasingly evident. The secondary market has recorded cumulative negative absorption of 230,866 sqm, while the premium market has achieved positive absorption of 314,100 sqm over the same period. This divergence is further reflected at a precinct level, with the CBD Core the only precinct to record positive absorption over the past five years, clearly outperforming the broader market. # Sydney CBD lease deals by industry sector 2025, % share of total market (sqm) Source: Knight Frank Research *Other includes Health Care, Admin Services, Education, Accommodation, Mining, Transport, Construction. '000 sqm Sydney CBD office annual net absorption Source: Knight Frank Research, PCA Prime v secondary, % Sydney CBD office vacancy Source:Knight Frank Research, PCA # Limited development pipeline # MODERATED SUPPLY IN 2025 Development activity moderated in 2025 following the significant wave of new supply delivered in 2024. New development completions during the year were limited, including 121 Castlereagh St, which added 11,500 sqm of office space to the CBD. Refurbishments brought a further 93,964 sqm back to the market. This was led by the comprehensive overhaul and redevelopment of 33 Alfred Street, which delivered 31,657 sqm of premium office space and was over $90\%$ committed at completion. In addition, Charter Hall completed its major refurbishment of One Shelly Street (29,772 sqm), with the asset also achieving strong leasing outcomes. On the other hand, withdrawals totalled 20,911 sqm across three buildings. 105 & 107 Pitt St (5,647 sqm) was withdrawn for Cbus Super and Milligan Group earmarked development Halo Tower. Additionally, 189 Kent St (15,264 sqm) was withdrawn for Gurner's residential development. Overall, net supply totalled 84,553 sqm in 2025, taking the total office stock in Sydney CBD to 5,385,115sqm, its highest level on record. # HIGH COMMITMENTS ACHIEVED FOR UNDERCONSTRUCTION PROJECTS Looking ahead, the development pipeline remains limited, with only three buildings currently under construction and all scheduled for completion in 2027. Among projects underway, Charter Hall's Chifley South (42,000 sqm) is well advanced, with commitments already exceeding $50\%$ . Meanwhile, Mirvac and Mitsui Fudosan's 55 Pitt St (63,000sqm) has already secured over $40\%$ commitments to date. In the Southern precinct, Lexus's Atlassian Central (58,000sqm) is scheduled for completion in 2027 and will serve as the global headquarters for Atlassian. Historically, new CBD office developments have achieved strong occupancy outcomes, and continue to attract solid demand. The high level of pre-commitment across current projects is expected to support the absorption of existing vacancies, while also providing greater confidence for developers to progress future schemes as market conditions improve. With economic rents at high levels, the delivery of new premium office developments is likely to be limited in the medium term. Several projects have already obtained approval but remain on hold. The most likely project to proceed in the next five years is the Halo tower development (42,400sqm). Sydney CBD development completions By commitment type, sqm Historic total completions Pre-committed - refurbished Available - Refurbished Pre-committed - new supply Available - new supply Letting up times new developments Commitment Prior to PC Leased post completion (0-12 months) Leased post completion (12-36 months) Uncommitted (or still within 3 year period post PC) Sydney CBD, since 2018 Source: Knight Frank Research Prime vacancy v total vacancy, as at Jan-26 Sydney CBD office vacancy rates by precinct Source: Knight Frank Research # Major office supply Under Construction / Major Pre-commitment <table><tr><td>#</td><td>ADDRESS</td><td>SQM</td><td>COMPLETION</td></tr><tr><td>1</td><td>Atlassian Central</td><td>58,000</td><td>H1 2027</td></tr><tr><td>2</td><td>55 Pitt Street</td><td>62,800</td><td>H1 2027</td></tr><tr><td>3</td><td>Chifley South</td><td>42,000</td><td>H2 2027</td></tr></table> Development Approved <table><tr><td>#</td><td>ADDRESS</td><td>SQM</td><td>COMPLETION</td></tr><tr><td>4</td><td>Halo Tower</td><td>42,400</td><td>2030</td></tr><tr><td>5</td><td>Toga Central</td><td>22,000</td><td>2031</td></tr><tr><td>6</td><td>Hunter Connection West Tower</td><td>58,000</td><td>2032</td></tr><tr><td>7</td><td>Hunter Connection East Tower</td><td>72,000</td><td>2034</td></tr></table> Mooted <table><tr><td>#</td><td>ADDRESS</td><td>SQM</td><td>COMPLETION</td></tr><tr><td>8</td><td>Central Place 1</td><td>47,209</td><td>2032+</td></tr><tr><td>9</td><td>Central Place 2</td><td>69,000</td><td>2032+</td></tr><tr><td>10</td><td>O Block</td><td>112,000</td><td>2032+</td></tr><tr><td>11</td><td>133 Castlereagh St</td><td>85,000</td><td>2032+</td></tr><tr><td>12</td><td>Darling Park Tower 4</td><td>75,000</td><td>2032+</td></tr><tr><td>13</td><td>56 Pitt Street</td><td>90,000</td><td>2032+</td></tr></table> # Rents soar in the core # CORE AND MIDTOWN LED THE FACE RENTAL GROWTH Prime net face rents increased by $5.5\%$ over the year to Q4 2025, reaching $\$ 1,397/$ sqm ( $1,651/$ sqm gross face, up $5.6\%$ ). Similarly, secondary net face rents rose $3.7\%$ to average $\$ 995/$ sqm ( $1,196/$ sqm gross face, up $3.9\%$ ) over the same period. The rental differential between prime and secondary has now widened close to a decade-high of $29\%$ . Tenant demand continues to weigh towards core locations, with Core recording the strongest annual growth among precincts (8.2% y/y), followed by Midtown (4.8% y/y). On the other hand, Western and Southern posted negative net rental growth in 2025. # DIVERGENCE IN NET EFFECTIVE RENTAL GROWTH Incentives edged down slightly from $36.4\%$ in Q4 2024 to $35.6\%$ in Q4 2025. This is primarily driven by the best in class buildings in the core, where incentives in the Core fell from $34.0\%$ to $32.4\%$ , and Barangaroo eased from $34.0\%$ to $33.0\%$ in 2025. In contrast, incentives in the Western and Southern increased to $41.2\%$ and $42.0\%$ , respectively. A clear divergence in net effective rental growth has resulted across precincts. Over the year to Q4 2025, positive net effective rental growth was recorded in Core (11.8%), Midtown (5.2%) and Barangaroo (3.6%). Meanwhile, both Western and Southern experienced net effective rental declines. Looking ahead, steady tenant demand is expected to continue supporting rental growth, particularly within the core locations. Effective rents are likely to trend positively across the CBD as the market enters into a period of limited supply extending through to 2030. Sydney CBD office rents and incentive $/sqm,% Sydney CBD prime office rental growth Annual rental growth rate Source: Knight Frank Research Recent significant tenant commitments <table><tr><td>Occupier</td><td>Property</td><td>Precinct</td><td>Size sqm</td><td>Net face rent $/sqm</td><td>Incentive %</td><td>Term yrs</td><td>Start Date</td></tr><tr><td>Snowy Hydro ~</td><td>225 George St</td><td>Core</td><td>1,856</td><td>1,565 (g)</td><td>38.7</td><td>10</td><td>Q2-26</td></tr><tr><td>HWL Ebsworth Lawyers~</td><td>5 Martin Place</td><td>Core</td><td>11,023</td><td>1,360</td><td>36.0</td><td>11</td><td>Q2-26</td></tr><tr><td>CEFC ~</td><td>1 Bligh St</td><td>Core</td><td>1,637</td><td>1,800</td><td>30.0</td><td>7</td><td>Q1-26</td></tr><tr><td>Braze*</td><td>151 Clarence St</td><td>Western</td><td>1,162</td><td>1,310</td><td>33.5</td><td>5</td><td>Q1-25</td></tr></table> $\sim$ Direct * Renewal (g) gross face Source: Knight Frank Research # Tightening yields reinforces market confidence # YIELD TIGHTENING DRIVES CAPITAL VALUE GROWTH Yields in Sydney CBD tightened for the first time after holding flat since 2024. Prime and secondary yields closed 2025 at $5.70\%$ and $6.25\%$ , reflecting a compression of 33bps and 25bps respectively. Among precincts, tightening yields were observed in the best buildings in Core and Midtown, while yields in Western, Barangaroo and Southern remained unchanged since 2024. The combination of yield compression and rental growth uplifted the capital values. Prime capital values increased by $11.6\%$ , and secondary values rose $7.8\%$ over the year, representing the strongest annual growth for both markets since early 2020. # DOMESTIC AND OFFSHORE CAPITAL DRIVING TRANSACTIONAL ACTIVITY Sydney CBD transaction volumes totalled \(3.3 billion over the year. Following a reset in yields and capital values, improved market transparency supported a renewed uplift in investor confidence, particularly for high-quality, well-located assets. Transaction activity was led by the sale of Grosvenor Place, acquired by GPT and the Commonwealth Superannuation Corporation, representing one of the most significant office transactions in the past five years, with a 75% stake selling for c$1.3 billion. Further support was provided by the sale of 135 King St to Daibiru Corporation for $631.5 million in early 2025. Domestic capital accounted for $43\%$ of total investment volume in 2025, marking a shift from 2022 when offshore capital dominated, contributing over $75\%$ of transaction volumes. While offshore capital remained active, increased domestic participation in 2025 reflects growing conviction around pricing and renewed confidence in the long-term fundamentals of the Sydney CBD office market. Despite the recent rise in inflation and associated risk of further interest rate tightening, investor confidence in the Sydney CBD office market remains underpinned by its long-term fundamentals. Limited new supply, positive rental growth expectations and improving tenant demand are likely to support targeted acquisition opportunities, with a clear preference for prime, well-located assets. # Returning to growth Quarterly capital value growth, Sydney CBD Office Source: Knight Frank Research, MSCI Sydney CBD core precinct office yield spread Prime v secondary Sydney CBD office transactions By purchaser location, $ millions, $10m+ Recent significant sales <table><tr><td>Property</td><td>Price $ m</td><td>Core Market Yield %</td><td>NLA sqm</td><td>$/sqm NLA</td><td>WALE</td><td>Purchaser</td><td>Vendor</td><td>Sale Date</td></tr><tr><td>35 Tumbalong Boulevard</td><td>360.0</td><td>6.5 - 7%</td><td>27,749</td><td>12,973</td><td>3.7</td><td>Barings</td><td>Lendlease / Aware Super</td><td>Q4-25</td></tr><tr><td>225 George Street (50%)</td><td>860.0</td><td>~6.0</td><td>85,509</td><td>20,500</td><td>3.4</td><td>GPT</td><td>CSC</td><td>Q4-25</td></tr><tr><td>75 Elizabeth Street</td><td>101.8</td><td>5.4</td><td>6,104</td><td>16,678</td><td>2.3</td><td>Sydney Catholic Archdiocese</td><td>Kingold</td><td>Q3-25</td></tr><tr><td>20 Bridge Street</td><td>270.0</td><td>6.7</td><td>19,573</td><td>13,794</td><td>2.4</td><td>Anton Capital Partners JV PGIM Real Estate</td><td>Early Light International</td><td>Q1-25</td></tr><tr><td>135 King Street</td><td>631.5</td><td>6.2</td><td>32,695</td><td>19,315</td><td>4.0</td><td>Daibiru Corporation</td><td>Investa (ICPF)</td><td>Q1-25</td></tr></table> *Net sale price Source: Knight Frank Research We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you. Click here to subscribe Research & Consulting Marco Mascitelli +61290366656 Marco.Mascitelli@au.knightfrank.com Office Leasing Al Dunlop +61290366765 Al.Dunlop@au.knightfrank.com Capital Markets Michael Kwok +61290366620 Michael.Kwok@au.knightfrank.com Research & Consulting Ben Burston +61290366756 Ben.Burston@au.knightfrank.com Occupier Services Katherine Moss +61290366647 Katherine.Moss@au.knightfrank.com Institutional Sales Rob Sewell +612 9036 6847 Rob.Sewell@au.knightfrank.com Research & Consulting Naki Dai +61290366673 Naki.Dai@au.knightfrank.com Asset Management services Lisa Atkins +61396044710 Lisa. Atkins@au.knightfrank.com Valuations & Advisory James Marks +61290366684 James.Marks@au.knightfrank.com # Recent Research Leading Indicators Sydney Industrial State of the Market The Co-Living Report Aaaannnnnne aannnnnne annnnnne Australian Capital View