Sydney metro office vacancy stays high despite major deals
Sydney’s metropolitan office market remained characterised by high vacancy and uneven tenant demand in the third quarter of 2026, even as several large transactions showed continued investor interest in better-quality assets.
Cushman & Wakefield reported an overall metro office vacancy rate of 24.7%, alongside six-month net absorption of negative 19,543 square metres. North Sydney and Crows Nest were the only markets identified as recording positive absorption over the first half of the year, while Macquarie Park experienced the largest decline in A-grade occupancy.
Vacancy remains elevated across major precincts
Conditions varied considerably between metropolitan office markets during Q3.
North Sydney vacancy eased to 25.8%, supported by positive six-month net absorption of 1,506 square metres. Parramatta vacancy increased to 23.5%, while St Leonards and Chatswood recorded vacancy rates of 28.0% and 19.4% respectively.
Macquarie Park remained one of the weakest-performing locations, with vacancy reaching 25.1% after negative six-month net absorption of 19,185 square metres. Recent completions included 15 Khartoum Road in Macquarie Park, comprising 10,082 square metres, and 7 Charles Street in Parramatta at 4,523 square metres. Cushman & Wakefield said improving demand in selected precincts could support a gradual decline in vacancy once recently completed office space is absorbed.
Face rents rise while incentives limit effective growth
Prime net face rents across Sydney’s metropolitan office markets increased to an average of $707 per square metre per annum, representing growth of 2.4% during the quarter and 8.5% over the year.
Secondary net face rents rose to $583 per square metre per annum, up 2.6% quarter-on-quarter and 4.9% year-on-year. The report attributed the difference in performance partly to stronger occupier preference for higher-quality accommodation.
However, elevated leasing incentives continued to weigh on effective rental growth. Cushman & Wakefield expected this pressure to remain particularly relevant in locations where vacancy was above longer-term averages.
Large sales support investment activity
Investment activity remained elevated during Q3, led by several substantial metropolitan office transactions.
The report identified the $590 million sale of 100 Mount Street in North Sydney, the $143.9 million acquisition of 101 George Street in Parramatta and the $108 million transaction involving 60-66 Waterloo Road in Macquarie Park.
The sales table lists BGO as the buyer of 100 Mount Street from Dexus and Dexus Wholesale Property Fund, Sandran Property Group as the buyer of 101 George Street from Dexus, and Vita Partners as the buyer of 60-66 Waterloo Road from Stockland Trust.
Meanwhile, office yields continued to soften. Prime yields increased by 26 basis points to 7.89%, while secondary yields moved 49 basis points higher to 8.45%. The report linked the wider gap between prime and secondary yields to weaker demand for lower-quality assets and greater leasing risk in markets carrying high vacancy.
Cushman & Wakefield said demand was likely to remain uneven between precincts, with North Sydney expected to benefit from improved Metro connectivity, while vacancy across the wider metropolitan market was expected to remain elevated in the near term.
SOURCE ATTRIBUTION:
Based on reporting by Cushman & Wakefield in MarketBeat: Sydney Metro Office Q3 2026.
