The Sydney CBD office market is showing signs of recovery, with sublease space availability reaching its lowest level since the onset of the pandemic.
According to CBRE’s latest Sydney CBD Q2 Sublease Barometer report, the amount of available sublease space in the CBD has decreased to 80,088 square metres at the end of Q2 2024, down 8,670 square metres from the previous quarter.
This reduction has brought the CBD’s sublease vacancy rate down to 1.5 per cent, indicating a healthier outlook for the Sydney office market.
The improvement is largely attributed to the strong demand for high-quality office space over the past six months.
Thomas Biglands, CBRE’s Associate Director of NSW Research, highlighted the significance of this trend: “High-quality sublease space has been in strong demand over the past six months, with several leases signed.
“This has been the strongest contributor to the decrease in Sydney sublease volumes, with our analysis showing that the number of higher quality sublease listings above 1,000 square metres has dropped from 28 to 23.”
The report also notes a slowdown in large sublease additions to the market in 2024.
Only three new lots exceeding 1,000 square metres were added to the market in Q2, further contributing to the stabilisation of sublease space supply.
This positive trend in the Sydney CBD office market contrasts with the overall vacancy rate, which remained stable at 12.2 per cent in Q1 2024, according to the Property Council of Australia.
However, this figure could potentially be higher when considering subleasing opportunities, backfill spaces, and shadow vacancies.
As the Sydney CBD office market continues to evolve, the stabilisation of sublease space and increased demand for high-quality offices suggest a gradual recovery in the commercial real estate sector.
This development may provide valuable insights for investors, tenants, and property managers navigating the post-pandemic office landscape.