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A Closer Look at the Sydney Office Market with Anthony Harris

By Silvia Wei

27 years ago a young Anthony Harris started working in residential real estate in Sydney’s Eastern suburbs. His career kicked up a notch when he began to focus on commercial leasing, and he really found his stride when he joined Ray White way back in 2001.

Since then he’s worked with countless high profile clients, from the Museum of Contemporary Art to Saba Group and even the Australian Olympic Committee. But his most rewarding work has been in helping the next generation:

“To me the greatest success has been mentoring young agents joining my team who grow in confidence, skill and knowledge and develop into high performing agents. Seeing Taylor Yankos win the Young Professional In Real Estate Ward in 2016 under my training and mentorship was a proud moment.”

Thanks to his knack for leadership and unmatched expertise, Anthony has been the principal and owner of Ray White Sydney commercial office leasing since 2007.

Over the last few years he’s become one of the foremost experts on the city’s office market. We sat down for a chat with him to find out what he knows.


The Sydney Office market is showing mostly positive signs, all of which point to an promising future in the market for investors. However, net stock absorption was in the negatives for the first time in three years over the six months to January 2017. This was recorded at  -32,536sqm, and has been caused by large scale stock withdrawals according to Harris:

“We have seen significant stock withdrawals as a result of many commercial buildings being converted into residential development, and several office buildings being acquired by the government for the new Metro Train line.”

Perhaps as a result demand continues to stay strong:

“Demand has been strong thanks to continuing growth of the technology sector. Companies such as Facebook, Atlassian, Linkedin, SnapChat, Twitter and Freelancer are growing rapidly and demanding more space,” said Anthony.

This has caused a further reduction in vacancy rates causing rents to rise in some sectors by 20 to 30 per cent in the last two years. This is accompanied by record low vacancy rates, which have seen Sydney again claim the mantle of the lowest vacancies of any major Australian city.

Currently the rate is at 6.2 per cent, or 312,677sqm of vacant stock, and is heavily weighted towards premium stock. As interest rates remain low, capital growth will continue its impressive trends. Over the last year Midtown’s average capital value has increased by 25.7 per cent, while the Western Corridor has increased by 13.9 per cent and the Southern precinct has increased by 35.4 per cent. Harris predicts that this will continue thanks to strong demand:

“There is a constant investment demand from superannuation funds, private investors, as well as overseas investors seeking to buy commercial real estate to achieve good yields and capital growth.”

Prime yields are compressing towards 5 per cent thanks to the high demand, however this has not hindered investors due to the current low interest rate environment.


No investment is risk free, even in a market as red hot as Sydney. However, Anthony suggested taking the following measures to reduce your investment exposure:

  • Get to know an experienced agent in the market that is willing to assist you with industry insights
  • Research the market thoroughly, and understand the current average values, yields and rents
  • Attend commercial auctions to get a send of how active the market is
  • Make sure that there is an adequate sinking fund balance to maintain services
  • Commission a building report and be aware of any  expensive upgrades required
  • Be aware of any changes in the market you’re buying in, from infrastructure changes as well as supply and demand risk
  • Understand the likelihood of vacancies and refurbishment costs when offering a space for lease. Be prepared to sustain vacancies of 3 to 6 months
  • Minimise your exposure in leasing deals by ensuring your potential tenant has a strong business track record
  • Check potential tenants financials and ensure you have an adequate bond to protect you if there is a rental default

Regardless of how careful you are, if you choose the wrong investment you’ll struggle to succeed. Anthony offered us some insider tips on what assets are performing particularly well at the moment.

First, he recommends looking out for retail precincts in areas where there is clear increases in population and both residential and commercial development. Bulky goods sectors are also seeing improved rents and capital values thanks to the boom of online shopping, and the resultant need for more warehousing for storing products.

Lastly, Anthony noted that the office market is now at record high levels for rents and sales prices, however, there are still great opportunities to buy and maximise returns in areas where there is good labour growth and access to transport.


The future for Sydney’s office market is unquestionably bright, and investors should certainly focus their efforts on making the most its consistently high returns. While interest rates stay low, yields should too and the market should continue as is.

However, if there is an increase in interest rates this could have a flow on affect increasing rental yields and softening capital growth. Anthony suggests that the future will be positive regardless:

“The future of the Sydney Office market looks very positive for landlords. There is limited supply risk, and while the labour growth and tenant demand is still strong we should see good rental growth and capital value improvements in the office market.”


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