Sydney suburban office vacancy rates tightening: Chart of the week

Office vacancy rates in in the Sydney suburbs have tightening noticeably over the past 12 months to January, according to a new report from Knight Frank.

Knight Frank records the suburban office vacancy rate declining from 9.5% to 7.9% between January 2012 and January 2013.

The Sydney suburban office market excludes the CBD and North Sydney office markets.

“While the drop in vacancy was partly a function of net supply, it was also reflective of steady organic demand,” notes Knight Frank.

Positive net absorption for the year (office space leased minus office space withdrawn from the market) measured 47,396 square metres or 1.6% of total stock.

The graph below shows that the vacancy rate has tightened in all suburban markets, bar the outer western Sydney market. 

According to Knight Frank, the majority of leasing activity which drove the healthy absorption figure occurred in the first half of 2012 with some loss of momentum in the second half of the year.

“This pattern was commensurate with the labour market, which showed metropolitan Sydney outperformed the NSW state total between mid-2011 until the second half of 2012 when both markets experienced some softening.

“With business conditions and confidence still below trend levels it is likely that leasing conditions will remain inconsistent over the first half of 2013 before an anticipated improvement in employment growth towards the end of the year.