Strata office values in the Sydney CBD are soaring to record highs, with the average sale price tipping past $1.5 million for the first time, new research shows.
This is up more than 31 per cent from $1,142,000 in January 2018, Ray White Commercial figures show.
Capital values on a per-square-metre basis have also climbed up by about 16 per cent from last year, as the average price for strata offices reaches more than $11,000 a square metre.
Core CBD strata offices recorded greater growth compared with the overall average, leaping by 20 per cent from 2017 to about $13,500 a square metre.
A 110-square-metre strata office at 2 Bridge Street – part of the core CBD precinct – sold for $1.66 million in April 2018. That sold for about $15,000 a square metre on a 3.6 per cent yield.
And a 64-square-metre office suite at 109 Pitt Street – also in the core precinct – sold for $600,000 or $14,689 a square metre.
The average strata office suite size is about 133 square metres.
Ray White Commercial NSW principal Anthony Harris said there was no sign of easing competition, with the strata office vacancy rate of the Sydney CBD at 2.6 per cent.
“Interest levels have not subsided for Sydney CBD Strata office assets,” he said.
“As vacancy levels continue to maintain a low rate across the broader Sydney CBD market, rents continue to be on the up which has seen more occupiers looking to shelter from these increases.”
There are more than 462,000 square metres of office strata stock in the Sydney CBD, which is about 9 per cent of the 5 million square metres of total office stock.
“Limited supply available for sale has also increased competition and been instrumental in growing capital values into 2018 after stand-out increases in 2016 and 2017.”
More than $99 million of strata office assets have changed hands between January and August 2018.
But it “may be a struggle to achieve the $145.06 million recorded for the full calendar year in 2017”, Ray White head of research Vanessa Rader said, given it was nearing the end of the year.
Ms Rader said growth for strata offices was also strong when looking at longer-term figures.
“Over a five-year period, the growth in this segment of the market has been remarkable, particularly given the prolonged period (before 2013) where limited change occurred in values for this asset class,” she said.
“Overall the Sydney CBD strata market has yielded annual growth of 24.5 per cent per annum (across the past five years) which is below the high results achieved in the core precinct with annual growth of 29.22 per cent.”
Meanwhile, the southern CBD market has shown the lowest growth rate, despite still seeing a nearly 15 per cent increase in capital values since 2013.
“The southern (CBD) precinct has shown some volatility over the longer term given its various quality and limited stock levels, however (it) has also shown positive results,” Ms Rader said.