Commercial Investor activity in the Sydney office sector gained momentum through 2007 and this is expected to continue as rents rise and tenants compete for quality office space. Vacancies have been especially tight - under four per cent - with premium Central Business District stock. Total Sydney CBD vacancies should continue at around seven to eight per cent.
In the CBD the major commercial development coming on stream is the Multiplex $1.1 billion King Street Wharf project. The first of 13 buildings will be the 4.5 star Australian Building Greenhouse Ratings, American Express Tower which comprises 14,000sqm of office space and four levels of basement parking.
Despite projects like this, some tenants will venture out of the CBD, to the advantage of suburbs such as North Sydney, Crows Nest, Chatswood and North Ryde.
Vacancy rates in Chatswood fell by half through 2007 to around seven per cent, with North Sydney posting the next strongest performance.
Further out, vacancy rates also fell marginally in Parramatta and, with good growth expected to continue in that area, demand will be steady.
Awareness of the ABGR is having an effect with a recently completed 4.5 star, 18 storey office tower in North Sydney. The building, the first 4.5 star ABGR for the area, features 11,000sqm of office space, 129 car parks, 42 bicycle spaces, lockers, showers and a café, with LogicaCMG taking the naming rights.
The industrial commercial sector should perform strongly as Sydney evolves as a distribution and logistics focused industrial market. Locations with access to transport corridors will remain in good demand, as will demand for warehouses. North Ryde, in particular, should enjoy ongoing strong leasing activity which, in turn, will support rental and capital value growth.
The hotel / leisure commercial sector in NSW is receiving its share of activity with the 135 strata titled apartment resort at Mt Panaroma on the market. This unique resort, the largest of its type west of the Blue Mountains features seven storeys of apartments, a café, tennis courts, swimming pool and conference facility.
In the leisure market the 7.5ha Arnott’s Biscuit factory at Strathfield is now home to a new 38 lane bowling and entertainment centre. This coincides with the opening of the 20 lane complex at Darling Harbour which comprises a restaurant, interactive games complex and a soon to be completed M9 Laser Skirmish facility.
This level of activity suggests that commercial investment is likely to remain strong, both in Sydney and in regional centres, as buyers chase limited quality stock.
Commercial Property Outlook 2008 - New South Wales 
