The Sydney CBD office market is experiencing its strongest sustained rental growth since the mid 1990s.
With the average prime CBD gross effective rent expected to exceed $1,000 per square metre in the near future, how affordable is this and how much pain is it likely to cause tenants?
Analysis by Cushman & Wakefield Research indicates that, in theory, tenants should have some capacity for higher occupancy costs as rental growth has underperformed both inflation and profit growth since 2001. However, sudden large rent increases are likely to be outside business plans and cause considerable pain.
To gain an indication of how much pain rent increases might generate, Cushman & Wakefield Research has developed a Rental Pain Gauge. The Gauge compares average annual rent to profit growth, adjusted for productivity gains. Download the report to view the Rental Pain Gage.