Dexus Office Demand Barometer

October 2017

Conditions for Sydney CBD office demand are the best in seven years

The Dexus Office Demand Barometer increased 2.6% in the September 2017 quarter, up 0.2 percentage points from prior quarter’s reading for the quarter ended 30 September 2017.

Conditions for office leasing demand in the Sydney CBD are the best in seven years.

The main factor driving the Barometer result was an improving labour market, reflected in an uplift in ANZ job advertisements.

Businesses are becoming more confident about the outlook and are increasingly hiring full-time rather than part time staff. Full time employment in NSW grew by 4.3% over the past year.

Positive business conditions and a firming share market are supporting leasing demand for office space.

In line with the Barometer, actual office take-up has rebounded over the past quarter driving Sydney CBD office vacancy to 6.0%, its lowest level since March 2008.

As the availability of space in the CBD tightens, other markets such as North Sydney stand to benefit from the overflow of demand.

We expect the vacancy rate in the CBD to fall further over the next year given a lack of forecast new supply.