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Sydney sees a new trend in property development

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A new trend is emerging in Sydney - office spaces are being converted into residential properties by savvy property developers.

According to real estate development firm CBRE​, at least 180,000 square metres of commercial space in Sydney's suburbs  will be turned into non-office premises over the next four years.

"This will have placed downward press on vacancy rates and, in the longer term, lead to the virtual elimination of a number of smaller office markets," read a media statement released by the company on May 27.

CBRE Research Analyst Megan Pryor said the trend has a high focus on suburbs like Epping, Burwood, Hurstville, St Leonards and North Sydney.

"Limited greenfield sites are available in these areas, which has led to a notable number of office buildings being sold to residential developers," she added.

In the short to medium term "displaced" office tenants will be in the market for around 50,000 square meters of space.

The forecast suggests that the office markets of Epping, Burwood and Hurstville will shrink by more than a quarter over the next four years as a result of the conversions.

CBRE Senior Director, Capital Markets Steven Kearney said this is going to put pressure on the market for rental office premises. 

"With the already reducing vacancy rates across all suburban commercial office markets, future stock withdrawals will further increase tenant demand driving strong rental growth and lower incentives."

In Epping alone, 17,900 square ​metres of office space will be turned into residential property over the next three years, this followed the government's re-zoning efforts to encourage housing growth.

The tenants who have relocated include Unilever and the NSW Government. There are rumours that Westpac, too, shall move its current offices from 12-22 Langston Place following a sale of the property.

In the surburb of Ryde, the Centrelink offices at 19 Devlin Street have been sold, indicating a conversion of 33 per cent of office spaces. Burwood is expected to shrink by 22,000 square metres.

Date Published: 31 May 2015
Category: General News

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