Lead indicators for office demand reach highest level in six years
The Dexus Office Demand Barometer for the quarter ended June 2017 increased to +2.4% in the June 2017 quarter, up 0.4 percentage points from last quarter’s reading.
The lead indicators for Sydney office demand are improving, with the Barometer reaching its highest level in six years.
The main factors driving the Barometer higher were uplifts in ANZ job advertisements and business confidence.
A firming labour market has been a significant driver of office demand in NSW. Rising job advertisements are a sign that companies are becoming more confident about hiring staff.
The NSW economy added 42,000 jobs over the past year, with many of these in the business services sector.
Leasing enquiries have predominantly been from the business services sector followed by the IT, and health and community services sectors. Enquiry has also been skewed to smaller tenancies, reflecting growth among small to medium enterprises.
Although the Barometer has strengthened, actual net absorption of office space has been constrained by a shortage of space. Sydney’s vacancy rate has tightened to the lowest level in nine years.The combination of positive conditions for demand and a declining level of available space is leading to rental growth in the Sydney CBD.