CBD tenants have rediscovered Sydney’s North

Having been in the doldrums for many years post the failure of the dot苏州美甲学校 industry, the lower North Shore office sector is coming back to life.

Conversion of older office towers into residential is also ending, paving the way for new commercial developments that are breathing life into the North Sydney central business district.

It is estimated that more than $500 million worth of office assets have changed hands in North Sydney in the past year as the area comes back onto investors’ radars.

The new metro rail line is also reinvigorating the suburbs along the highway to Chatswood.

The Property Council of Australia’s latest office market report shows the aggregate vacancy rate across all North Shore markets has dropped from 8.1 to 7.9 per cent in the six months to July, largely due to positive demand.

Dexus, Aqualand, Cromwell, Denison and Winton Property are among the many developers that have identified the North Shore as the new office zone outside the Sydney CBD and away from the buzz at Parramatta.

Michael Lochtenberg, director, leasing and development, office leasing at Colliers International, said over recent years the movement in tenants has been generally south from the northern suburbs and Macquarie Park into North Sydney and Sydney CBD, such as Goodman Fielder, Jacobs and Architectus.

???He said this movement was driven by corporates to attract and retain staff with access to amenity. This was greatly facilitated by high vacancy levels and corresponding high incentive levels.

“This movement south continues but appears to be slowing especially when tenants consider the move south extending over the bridge. It appears that the significant rise in rents and drying up of incentives is making tenants have second thoughts before they cross the Harbour Bridge, such as the Nine Network, which is moving to Winton’s 1 Denison Street, North Sydney,” Mr Lochtenberg said.

The rise of the new properties has been a drawcard for tenants such as Vodafone’s new head office at 177 Pacific Highway, while Flight Centre is looking to move from 474 George Street to the North.

The office asset at 116 Miller Street was bought by a private offshore buyer for $134 million and is the largest potential development site in North Sydney at 2304 square metres. It is directly opposite the proposed new Victoria Cross Metro Station.

The sale was negotiated by Knight Frank’s Tyler Talbot, Dominic Ong, Angus Klem and CI Australia’s Bevan Kenny and Chris Veitch who acted for Property Bank Australia, Security Capital Corporation and RG Property.

“Traditionally we would have thought Sydney CBD rents have exceeded rents in North Sydney, but this has not always been the case. But since the advent of the GFC, net face rents in North Sydney have been higher than that found in the city. This was also the case for net effective rents, with an exception of a brief period in the throws of the GST in 2008, soon after the delivery of 100 Arthur Street and the refurbishment of 101 Miller Street, following the vacation of Optus,” Mr Lochtenberg, said.

“We now forecast that the net effective rent spread will move from an approximate city discount of $80 per square metre in March 2014, to a premium of $130 per square metre in March 2020, a $210 per square metre turnaround in a period of six years. The underlying net effective rent for the CBD move from the current rate of $580 per square metre to the forecast peak of $740 per square metre in March 2020, a 28 per cent rise in less than three years from today.”

With talk now subsiding about the creation of a Metro Station in Crows Nest, the focus of local stakeholders seems to have shifted towards the Department of Planning & Environment’s (DP&E) investigation study of the St Leonards/Crows Nest Station precinct.

The DP&E has just released an interim statement outlining a draft vision, objectives and guiding planning principles for the priority precinct.

The area has been broken down into 10 “character areas” with increased densities set to be focused in areas closest to the new Crows Nest Metro Station and St Leonards Train Station.

Tom Appleby, Colliers International’s investment services operator, recently sold a 12-lot commercial strata building in-one-line at 84 Alexander Street. He expects collective sales to be become more prevalent in the area as developers jostle for sites.

“With amalgamations being encouraged by the DP&E to ensure co-ordinated redevelopment, it’s anticipated that the incentives being offered to both freehold and strata-titled property owners in certain areas will be great enough to ensure the process is worthwhile,” Mr Appleby said.

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