Strong Capital Growth For Sydney CBD Strata Office Market

Capital values in the Sydney CBD strata office market are enjoying strong growth for the second successive year, according to new research.

Vanessa Rader, Head of Research for Ray White Commercial, said 2015 had set a new benchmark for the Sydney CBD office strata market with more than $75 million changing hands and the average capital value rising by 7.48 per cent to $6,200 per sqm.

"The average capital value has seen good levels of growth over the last 12 months across all precincts of the CBD," Ms Rader said.

"Investment levels may not reach the highs of 2014 but the capital values achieved so far this year are 21.75 per cent greater than achieved in 2013. This highlights the quest for assets during this low interest rate period and the range of investors keen to invest in the Sydney CBD strata market."Ms Rader said the greatest increase in the Sydney CBD strata maket had come from the Southern precinct at 37.04 per cent, although given the limited investment pool and the low base of 2014 this result was in line with the volatile nature of this region.

"Midtown has the greatest volume of sales yet achieved the lowest rate of growth of 3.20 per cent to $5,821 per sqm, nearing closer to the high of the Core, which has had a healthy 6.89 per cent increase since 2014 to $6,912 per sqm," she said.

"The Western Corridor has a wide range of quality in assets from small Chinatown assets to the King Street Wharf resulting in a broad range of capital values. The volumes of transactions have been high thus far in 2015, resulting in a sizeable 8.83 per cent increase to $6,077 per sqm."Ms Rader said investment activity in the Sydney CBD strata market reached $75.07 million, which represents 11,862 sqm across 96 transactions.

"The greatest turnover achieved was in Midtown with $28.85 million across 34 sales with an average property size of 141 sqm, which highlights the affordable nature of the precinct compared to the usually dominant core," she said.

"In the Core, investment of $25.44 million changed hands. There were 42 transactions, highlighting the smaller suite size with an average of 88 sqm."Ms Rader said the Western Corridor had historically been an active region with a high level of supply at differing qualities making it an attractive region for both owner occupiers and investors.

"During 2015 there has been $18.11 million sold across 16 transactions in the Western Corridor which represents 2,980 sqm of stock, bringing the average suite size up to the largest across the CBD at 181 sqm," she said.