Property REITS with exposure to the Sydney office market are in for a rough few years
Property REITS with exposure to the Sydney office market are in for a rough few years. According to an article in the AFR this morning the Sydney office market is a ticking time bomb (sounds very dramatic) due to oversupply, large amounts of backfill space and underwhelming demand from corporate Australia. Commentary from Australian office property trusts in February is that there are green shoots in the office sector. Tenancy advisory firm LPC Australia says this is not the reality. Right now 9% of ¬Sydney's office market is available for rent, that means there is about 450,000sqm vacant. The historic net absorption per year is about 60,000sqm. If you divide the existing supply by that number we are looking at more than 7 years until that space is filled. In addition, new developments such as Barangaroo will add 365,000 sqm of office space in the near term. (VIEW LINK)