At the end of busy year, the north shore of Sydney has emerged as one of the fastest growing for office developments as its gives its Parramatta counterpart a run for its money.
The planned Sydney Metro line from Chatswood through the Sydney central business district and out to the eastern suburbs, has led to stock withdrawals, pushing down the vacancy rate to about 4.5 per cent.
JLL's head of office leasing North Sydney, Paul Lynch, said eight office buildings were withdrawn in the third quarter of the 2016 year across the North Shore, four of which were from North Sydney and four from St Leonards.
"This equates to 43,200 square metres or 2.9 per cent of the North Shore market," Mr Lynch said.
"Meanwhile, Chatswood recorded 4300 square metres of negative net absorption over the third quarter, as a result of Leighton Holdings vacating space and relocating to 177 Pacific Highway, with the vacancy rate increasing by 1.4 percentage points to 12.4 per cent."
The improved conditions have been a magnet for developers and tenants, with Vodafone launching its new-look store to cater for the increased office workers as well as the rising residential sector.
Nine Entertainment is also said to be a shoe-in as the anchor tenant for Winten Property Group's proposed 1 Denison Street project, on the site of the North Sydney Shopping World.
Winten paid $80 million for the property, which is also known as 77-81 Berry Street.
While no contract has been signed, Nine is keen to stay on the north side of the city and closer to its advertisers and media suppliers
Cromwell Property group is another investor that has focused its sights on North Sydney.
Amid its possible takeover of the Investa Office Fund, Cromwell has secured 15 leases at its flagship Northpoint Tower, signalling office space at its $130 million redevelopment is in high demand.
The raft of recent deals has been driven by both existing tenants keen to secure space before the redevelopment completion in 2018, and new businesses wishing to relocate to the increasingly popular North Sydney precinct.
In recent months, Cromwell has signed 4,500 square metres with new and existing tenants, predominantly from businesses in the professional services and finance industry.
The most recent leases with Ignition Wealth and Sun Label follows a string of previous transactions with SJD Investment, Swisswork and Anderson IT, and existing tenants Secure Parking, Red Hat and Insurance Advisor.
Damian Horton, Cromwell's head of property, said the continued demand and flow of recent deals indicated vacant space at Northpoint would quickly fill up in coming months.
"Now demolition at the site is complete and construction commenced, excitement is building at Northpoint and we are seeing a strong line of tenant enquiry. Businesses are quickly realising that quality office space in the rejuvenated North Sydney precinct won't last long," Mr Horton said.
"Northpoint will be a central element of the new North Sydney and we are pleased to have secured so many quality tenants."
Ignition Wealth, a leading robo-advice solution provide, has signed a five-year lease for 340 square metres on level 17 which commences on 1 December. The tenant will move from its existing tenancy two blocks away.
"Ignition Wealth had outgrown their office following a period of expansion and required more space. As it turned out, the suite they inspected on level 17 was the perfect fit for their requirements," Mr Horton said.
"Another new tenant, Sun Label, loved the building and location, and particularly the views over the Sydney Harbour from level 39." Cromwell has also secured a five-year lease extension to 2021 with Red Hat, a leading provider of software solutions."
The tenant has taken on additional space to a total of 760 square metres. Insurance Advisor and Secure Parking have also renewed their leases, with Insurance Adviser taking on additional space on level 31.
Located on the corner of Miller Street and Pacific Highway, the redevelopment will feature the 187 room Vibe Hotel North Sydney as well as an eat-street and roof-top bar concept to service the ever-growing professional population of North Sydney. Construction of the integrated, three-level facade commenced in September.
Leasing opportunities in the retail facade for the dining, specialty retail and food outlets were launched recently by Colliers International and Property Partnership Australia.
DEXUS Property Group at 100 Mount Street, North Sydney has appointed JLL national head of leasing, Tim O'Connor, and Mr Lynch, to partner with DEXUS' leasing team, headed by Chris Hynes, on the project's leasing.
According to Mr Lynch, the boom time conditions are from the construction of the Sydney Metro City and Southwest Rail Link, which he says is one of the "most significant infrastructure projects for Sydney city in recent history".
"It is well known the withdrawal of older office stock for the project is dispersing tenants and increasing competition for commercial space across North Sydney and the CBD," Mr Lynch said.
However, this demand will also be driven by the numerous contractors working on the project seeking office space located around the construction activity. In fact, this increase in demand is already starting to be felt on the North Shore, with JLL receiving enquiries from related businesses exploring their options in markets like Chatswood.
This was previously witnessed with the commencement of the North West Rail Link and more recently with the construction of the NorthConnex project, where JLL secured the Lendlease and Bouygues joint venture consortium to significant project office space adjacent to their construction activities.
"The impact on landlords includes the realisation of a broader pool of prospective tenants, and the opportunity to reconsider their leasing strategies; this may include maintaining existing fitouts for prospective project groups and providing increased flexibility around lease terms," he said.
