Skip Ribbon Commands
Skip to main content

News release


Sydney’s ageing office stock to be revitalised with developments like the commercial towers that form International Towers Sydney at Barangaroo

The development of Barangaroo will have a positive impact on the Sydney CBD office market by delivering product to the ageing Sydney office stock which has 47% of buildings more than 30 years old

SYDNEY, 10 MAY 2013 – Sydney has the oldest office stock profile throughout Australia, with almost half of the Sydney CBD office stock more than 30 years old. With developments like International Towers Sydney delivering the next generation of office product to the Sydney CBD, the city will become a world leader in sustainable office design.

A new research paper by Jones Lang LaSalle says the 284,000 sqm commercial development at Barangaroo has the capacity to meet only 50% of the projected demand in the Sydney CBD office market over the next ten years.

Construction has started on the $6 billion Barangaroo South, with the first offices due for occupation in the second half of 2015.  This  7.8 hectare mixed use commercial, residential and leisure precinct is based around three commercial towers that form International Towers Sydney.  Westpac, KPMG and Lend Lease have all pre-committed to International Towers Sydney.

Head of Office Leasing NSW at Jones Lang LaSalle Tim O’Connor said, “International Towers Sydney and other major developments at 200 George Street, 5 Martin Place, 48-50 Martin Place and 180 Thomas Street will deliver space into the Sydney CBD market between 2015 and 2017.  All of these developments have secured tenant pre-commitments since mid 2012.
“However, there is a misconception that completions equal supply in Australian office markets.  Over the next ten years, a significant proportion of Sydney’s stock will be withdrawn for refurbishment or converted to an alternative use and replaced by modern assets attractive to the growing class of global investors and their tenants.
“It is important to note that the overall office market vacancy has little relevance to large space users.  Sydney’s building stock is ageing and almost 50% is in excess of 30 years old.  Plus there are limited contiguous options in buildings with typical floor plates above 1,500 sqm.  The vacancy rate in assets with typical floor plates in excess of 2,000 sqm is essentially zero.
“As a result, tenant demand for the next generation of office accommodation is being expressed through pre-commitments,” said Mr O’Connor.
The new report titled, “International Towers Sydney – New development is shaping the future of Sydney as a global financial centre,” states this development and other major Sydney CBD developments are positive for the city’s global profile.
Jones Lang LaSalle’s Director of Office Market Research, Andrew Ballantyne said, “The development of International Towers Sydney will support Sydney’s aim to be a global finance centre and regional services hub.
“The FIRE (Finance & Insurance and Real Estate) sector is projected to account for 29% of employment growth in the Sydney CBD between 2012 and 2022.  These sectors are the largest occupiers of office space in New South Wales.
“There is a trend amongst large corporate occupiers in major financial centres globally to require space with a minimum floor plate of 2,000 square metres.
“There is a shortage of prime stock in the Sydney CBD that fits the requirement of floor plates above 1,500 sqm. Approximately 23% of the prime grade floors in the Sydney CBD are above 1,500 sqm and only 4.7% are above the 2,000 sqm threshold,” said Mr Ballantyne.
The preference shown by tenants for larger more flexible floor plates is highlighted by the breakdown of the Sydney CBD vacancy rate in Figure 5 below.  The vacancy rate in the Sydney CBD for all building grades was 8.4% in 2012, but for prime buildings with average floor plates in excess of 1,500 square metres the direct vacancy rate was 5.9%.  In the 2,000 square metre size tenancy, the vacancy rate is approximately zero with a small sub-lease available in one building.
Barangaroo on the CBD’s western harbour front is a 22 hectare mixed-use redevelopment.  The site is divided into three sections – a naturalistic six hectare park at the northern end, a central area featuring civic, educational, residential and recreational spaces and the southern precinct – Barangaroo South which comprises commercial, residential, retail and dining along with a new landmark hotel.