Sydney Office Market
Same week, two different cities and two different markets.
Two days after Melbourne’s event was the CoreNet Global State of the CRE Markets event. Thank you to Carissa Gallacher of CBRE and Dominic Brown of C&W for being part of the panel.
For the basics stats, according to the Property Council of Australia Office Market Report (Jan 2026) the Sydney CBD office market had a vacancy rate of 13.8% and experienced positive absorption of 11,350 m2 for the second half of 2025. This is now 18 months of positive absorption.
Spec suites got the panel going but because capital is now tight, turnkey solutions are the next evolution and offer a good solution to both sides of the leasing equation.
Supply continues to be a hot topic. Like Melbourne, there are alternatives and like Melbourne the more space a lessee needs, the harder it becomes.
To kick start the next wave of buildings, Sydney needs to achieve very high rents. This is where Dominic introduced his new catch-cry “flight to height”. Of course that led to a discussion about office demand. Carissa noted that the CBD only did 4 deals greater than 5,000 m2 last year. Not much for a big market. This goes to show that demand is not as buoyant as some would think.
And no conversation about office space demand can avoid the “AI Factor”. This is still the unknown factor however some are getting more certain about it. Even our fellow “Corenetter” from Dallas, Ryan Martin of Cotality, provided some of his know how on this and other topics. He shared that AI is starting to have an impact on office workers and therefore office space but not yet a noticeable one. His eye opener was how the utility/power companies in Texas are demanding large deposits for future data centre power. This is to stop all and sundry from ordering power but never using it.
Relative to the previous Melbourne event, Sydney was almost bullish. Or was it that everyone was excited to be back at the first Sydney event of the year and to gear up for the next 11 months?
Look forward to seeing how some of the bullish predictions pan out.
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