Infamous for its sky-high house prices, it appears that renting office space in Sydney is a more affordable proposition.
That’s according to new research from JLL, which shows premium office rents in Australia’s most populous city are more affordable than those in its global counterparts, and among the lowest in the Asia Pacific region.
According to the JLL Global Premium Office Rent Tracker’ (PORT), Sydney’s rents were significantly lower, at US$74 per square foot a year, than the Asia Pacific average of US$111. By contrast, Hong Kong had the most expensive premium office rents at $323 per square foot per year.
On a global scale, Sydney’s premium office rents ranked in 31st place behind cities such as Hong Kong, New York, London, Geneva, Los Angeles, Singapore and Zurich.
Tim O’Connor, JLL’s Head of Australia Office Leasing, said that Sydney’s ranking reflected opportunities for investors in a market often mistaken as expensive and unaffordable for some tenants and that, “the city’s premium office rental costs align with other world hubs such as Frankfurt, Chicago, Zurich and Los Angeles, making it a significantly inexpensive, and smart, option for multi-national organisations in the Asia Pacific region.”
He points to Sydney’s improving transport, amenities and technology infrastructure as an added draw for occupiers, referencing the city’s “current transformation phase in which it continues to improve its public and private transport facilities through new rail links and road networks.”
As technology continues to facilitate workplace change and tenants look to more collaborative and flexible space, organisations are in expansion mode which has, in turn, led to the vacancy rate in Sydney halving to 7.3 percent over the course of 2017.
And the future is bright for the sector, according to JLL’s Head of Research for Australia, Andrew Ballantyne, who points to the “growing NSW economy, above trend employment growth and the projected record levels of infrastructure spending over the next four years.”
Going forward, Ballantyne believes the expansion of multi-national finance institutions will drive the underlying demand for Premium Grade space.
“We’ve already witnessed increased lending activity from Japanese and Chinese banks in Australia and expect a number of them will be active in 2018,” he says.
The PORT ranks occupation costs across 54 major office markets in 46 cities on a like-for-like basis. Rents are standardised on a Net Leasable Area basis and adjusted to take into account tenant incentives and rent-free periods.
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