Dexus Research forecasts Sydney CBD office vacancy to fall to 6.5% by FY18 and supply of new stock to drive flight to quality.

Market factors and assumptions

  • A recovery in office tenant demand in the Sydney CBD is well underway and Dexus Research forecasts this to remain solid in FY16
  • Forecast net absorption of 80,000 square metres per annum over the next three years compares to 137,000 square metres in FY15
  • Post completion of Barangaroo in FY17, supply is expected to drop sharply in FY18
    • Forecast total supply of 444,000 square metres over the next three years, of which 57% is pre-committed
    • Forecast total withdrawals of 281,000 square metres, of which 42% are permanent withdrawals for alternate use
  • Forecast outcomes

    • Sydney CBD office vacancy forecast to fall to 6.5% by FY18
    • Supply of competitively priced new stock will drive a significant flight to quality that will boost prime take-up