Sydney CBD office recorded the eight straight quarter of positive demand

• The Sydney CBD recorded 20,500 sqm of positive absorption over Q4 2025. This was driven mainly by large tenant (>1,000sqm) demand with all four precincts in the CBD recording a positive result, driven by Midtown (12,599 sqm).
• Five out of the ten Sydney office markets have recorded positive net absorption over Q4 2025. The strongest result outside the Sydney CBD was Macquarie Park, which recorded 15,500 sqm of net absorption while the weakest result was in Parramatta (-15,600 sqm).

Sydney CBD completions were counterbalanced by stock withdrawals

• In the Sydney CBD, there were two completions totalling 29,600 sqm over the quarter and four withdrawals totalling 23,600 sqm. The withdrawals were a combination of assets to be demolished for a residential development and others for a new entertainment precinct.
• There were four completions in the non-CBD office markets totalling 80,800 sqm. The largest of these completions was Victoria Cross Tower, North Sydney (57,065 sqm). There is currently 60,400 sqm under construction in the non-CBD markets.

Prime yields were unchanged over the quarter in the Sydney CBD market

• Sydney CBD Core prime net face rents grew 1.5% over the quarter and by 6.5% over the year to average AUD 1,540 per sqm p.a. Prime incentives reduced marginally to 32.8%. The rate of growth is being supported by solid leasing activity within quality stock.
• Rental performance in the non-CBD metro markets was predominantly flat over the quarter, as face rents increased marginally and prime incentives recorded minimal movement. As a result, net effective rents have remained largely unchanged.

Outlook: Vacancy is likely to decrease over the near-term as supply outlook is very limited

• The Sydney CBD vacancy rate is forecast to gradually fall over the near term. Tenants are likely to seek higher quality office accommodation and to consider options outside the Core, as there are few quality large contiguous space options available in the precinct.
• The Sydney metro markets’ development pipeline continues to dwindle, as elevated vacancy rates and uplift in construction costs have pushed projects out into later years or developers have resubmitted for alternative use on these sites.