The total CBD office market absorbed 152,983 sqm of CBD Oil space during the 12 months to July 2007. Demand for A-grade office space was particularly strong with the A-grade off market absorbing 102,472 sqm. The premium office market demand has decreased significantly with a negative absorption of 575 sqm. In comparison, a year ago the premium office market was absorbing 109,107 sqm.
With negative net absorption and rising vacancy levels, the Sydney market was struggling for five years between the years 2001 and late 2005, when things began to change, however vacancy remained at a fairly high 9.4% till July 2006. Due to competition from Brisbane, and to a lesser extent Melbourne, it has been a real struggle for the Sydney market in recent years, but its core strength is now showing the real outcome with probably the finest and most soundly based performance indicators since early on in 2001.
The Sydney office market currently recorded the third highest vacancy rate of 5.6 per cent in comparison with all other major capital city office markets. The highest increase in vacancy rates recorded for total office space across Australia was for Adelaide CBD with a slight increase of 1.6 per cent from 6.6 per cent. Adelaide also recorded the highest vacancy rate across all major capital cities of 8.2 per cent.
The city which recorded the lowest vacancy rate was the Perth commercial market with 0.7 per cent vacancy rate. In terms of sub-lease vacancy, Brisbane and Perth were one of the better performing CBDs with a sub-lease vacancy rate at only 0.0 per cent. The vacancy rate could additionally fall further in 2008 as the limited offices to be delivered over the following two years come from major office refurbishments of which much has already been committed to.