The Sydney CBD is getting hot with more cranes being erected to cater for the increased developments that are awaiting approval by the City of Sydney.
These range from private projects to office towers and residential apartments.
According to the latest RLB Crane Index, 111 new tower cranes were erected across Sydney’s skyline in the past six months, with 90 of these being on residential projects.
Stephen Ballesty, Rider Levett Bucknall’s (RLB) director of research & development, said the fourth quarter 2015 RLB Crane Index has identified a total of 220 cranes currently erected across NSW’s capital city, a 36 per cent increase in number since March 2015.
“Positive sentiment in the commercial sector is seen by the net increase of one crane for the period. This countered the 19 per cent decrease in the previous Index. Strong growth in the health, education and civic sectors has seen an additional 9 cranes collectively commence during the period,” Mr Ballesty said.
For the office sector, conditions are improving.
Sydney’s office vacancy rate has continued to fall, however rents for high-rise offices have only marginally increased over the six months to June 2015, according to Knight Frank.
John Preece, head of office agency at Knight Frank, said in Sydney, the falling vacancy rate has continued and is currently sitting at 6.3 per cent.
The prime vacancy rate has fallen significantly over the past 12 months – mainly driven by aggressive incentives, which has constrained effective rental growth.
“We expect the vacancy rate to increase to between 8.5 and 9 per cent by the end of 2016, with a higher prime vacancy rate of closer to 10 per cent. This is due to significant supply which is not being totally offset by demand and stock withdrawals. This will impede rental growth in prime-grade assets over the coming year,” Mr Preece said.
“In Melbourne demand remains solid, and mirroring Sydney, we are experiencing substantial interest including recent commitments from the information technology sector moving into the CBD and fringe markets.
“The east end of the CBD continues to outperform the rest of the market, translating into increasing face rents and reducing incentives. We expect this to spread through the market over the coming year as there is minimal supply.”
The Global Cities report found that London skyscrapers have seen rents increase by more than 10 per cent in the past six months, while Hong Kong skyscrapers remain the world’s most expensive place to rent an office in a tower.
Meanwhile in a private development, the City Tattersalls Club, has briefed its members on the proposed airspace development above its premises at 194-204 Pitt Street for the final time, ahead of the Special General Meetings to be held on December 8 this year.
It has been in the planning stage for some time and now has a value of about $96 million. If approved by members, construction will start sometime next year. The Stage 1 development application was submitted to the City of Sydney Council in August this year and the public exhibition closed on October 16.
Tony Guilfoyle, chief executive of City Tattersalls Club, said if members voted in favour of the development, the club would enter into a Development Management Agreement (DMA) with ICD Property and Sinclair Brook, who would undertake the development project, which would include a 100-room hotel.
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