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The Sydney office leasing market is experiencing a trend towards higher-quality office spaces

May 2, 2024

The Sydney office leasing market is being driven by a notable trend of businesses relocating to higher-quality buildings, leaving behind historically high vacancy rates in B and C-grade buildings. 

This situation is being driven by global trends including the war for talent and the impact of companies responding to the working from home phenomenon as well as landlords offering significant incentives to attract or retain tenants in response lower levels of demand generally.

These developments highlight the diverging nature of Sydney’s office sector, indicating that newer and higher-quality office accommodation will benefit from a “flight to quality” as employers prioritise the best amenities for their staff.

Chris Nicholl, Principal of Raine & Horne Commercial Sydney CBD, notes, “As a consequence of the flight to quality, landlords in older buildings are realising the importance of investing in the presentation and functionality of their properties.”

The ongoing trend of working from home is influencing how businesses approach office leasing. According to Chris, while more employees are returning to offices, each company handles the hybrid working model differently. 

“There’s no rule of thumb, but many businesses now require less space than before COVID-19,” he said. 

This trend is driving increased activity in the smaller end of the market, with many smaller suites leased having been leased in the past two quarters. . 

“Demand for smaller spaces remains strong, while there is less demand for midsize and larger spaces due to the impact of working from home. This imbalance means landlords take longer to fill vacancies in larger spaces.”

One of Sydney CBD’s best-served commercial precincts, King Street Wharf, boasts a smaller suite available for lease at 324/5-15 Lime Street, Sydney, that has piqued the interest of smaller professional, creative and marketing businesses. 

Listed collaboratively by Chris Nicholls and Christian Cirillo from Raine & Horne Commercial Parramatta, the 196 square metre waterfront office space offers a prime location with Darling Harbour foreshore views and King Street Wharf and Lime Street at the rear.

The suite features a generous private balcony with panoramic views of Darling Harbour and Barangaroo, providing abundant natural light through floor-to-ceiling glass across two sides of the floor plate. It includes a complete fit-out comprising a foyer/waiting area, three partitioned offices, a large boardroom, six workstations, a well-equipped kitchen, male and female toilet facilities, a storage room, and basement parking accessible via a direct lift.

Chris Nicholls commented, “The evolving attitudes towards work make a balcony overlooking Darling Harbour and proximity to Wynyard, Barangaroo, and world-class waterfront bars and restaurants a significant recruitment asset for the business leasing this space. 

“We anticipate interest from smaller professional firms,  as well as creative users including , marketing and advertising agencies, and arts-related companies.”

For more information about commercial real estate markets in the Sydney CBD, contact Raine & Horne Commercial Sydney CBD on 0474 006 704.