As we approach the close of another year, MMJ are reflecting on the Sydney commercial office leasing market and what we expect from 2023.
Overall, 2022 has been a positive year for commercial tenants across the Sydney CBD and Fringe areas. We have seen an increase in vacancy rates (9.3% Q2 > 10.1% Q3 > 13.7% Q4) due to an increase in commercial stock across the Sydney CBD in 2022, as well as businesses re-evaluating their size requirements in the wake of hybrid working influenced by the pandemic. This has resulted in a tenant’s market, with commercial landlords offering high incentives (on average between 30-34%, in contrast to 21% in 2019) and contributing to office fitouts, to compete to fill spaces.
Smaller occupiers have been responsible for the bulk of the take up in 2022, a trend MMJ envisage to continue into 2023. The notable trend of flight to quality has been prominent across the city, seeing such smaller tenants seizing the opportunity to upgrade their premises, secure core locations and expand in size. Larger players in contrast, have been downsizing on the whole to adjust to new working practises of staff, whilst also striving for quality fitouts, core locations and premium premises offering facilities that attract workforces back into the office. Such premium amenities in commercial premises include end of trip facilities, hotel-style features, spas, gyms and childcare.
MMJ believe the tenant’s market will continue next year. 72,000 sqm of new stock will arrive in 2023. Despite this being less than in 2022, businesses will continue to re-evaluate their size requirements, vacancies rates will remain high and subsequently landlord incentives will remain high.
2023 therefore presents a great opportunity for tenants to secure their next commercial premises and upgrade to a high quality offices, in core locations, with high incentives on offer. Get in touch below with our sales and leasing agents for assistance in identifying and securing your next commercial premises in 2023. MMJ can provide a free personalised one on one approach, advice on market conditions and access to all office, retail and industrial availabilities across the Sydney CBD and Fringe areas.