The Sydney office vacancy rate remained flat over the quarter

• The Sydney office market recorded 25,400 sq.m. of positive net absorption over Q1 2026. The office vacancy rate remained flat over the quarter at 21.5%. The CBD remains the key source of positive demand, whilst some non-CBD markets remain challenged.
• Sydney office prime gross effective rents grew 3.9% over Q1 2026. The quarterly growth rate was driven by high quality stock in the Sydney CBD as tenants look to upgrade into higher quality office accommodation. Rent growth remains challenging across Sydney’s non-CBD markets, as a result of elevated vacancy rates.

One completion was recorded across all Sydney markets totalling 4,500 sq.m

• Sydney office transaction volumes totalled AUD 1.2 billion over the quarter with majority of this being concentrated in the non-CBD markets (AUD 873.6 million), in particular North Sydney. Prime yields compressed in the Sydney CBD driven by sales evidence of best in class stock.
• The non-CBD Sydney yield profile remained unchanged.

Sydney office transactions were concentrated in the metro markets over the quarter

• There was one completion recorded across the Sydney office markets this quarter totalling 4,500 sq.m. in Parramatta.
• We are currently tracking 175,600 sq.m. under construction across the Sydney markets with all of this stock being concentrated in the Sydney CBD.

Outlook: Solid rent growth to continue in quality stock

• Over the next two years the Sydney office market will enter a very low supply period.
• Elevated construction costs and high economic rents required to get new development out of the ground will support leasing activity of existing high quality stock in the CBD and non-CBD markets, as it is expected tenants will continue gravitating to these types of assets, supporting a fall in prime vacancy rates.