An inadequate supply of new office space coupled with rising numbers of new workers will continue to drive the office vacancy rate in the Sydney CBD down, with new figures highlighting the city's growing pains over the last five years.
The proportion of the city's jobs in "inner Sydney" swelled by 15 per cent between 2012 and 2017, adding 66,000 new jobs to the CBD.
A total of 500,000 workers are now based in the city area, with 86 per cent employed in full time positions across 23,500 businesses, with more than half based in the area north of Bathurst Street.
The statistics come from the city’s floor space and employment survey, a detailed audit of more than 26,000 buildings conducted every five years within the local government area.
The findings relate to the use of floor space and how many people are working in central Sydney, including the kinds of work environments they prefer and which sectors are growing.
Financial services and professional business services currently dominate the city's office use, with 23.1 per cent (115,693 workers) and 19.8 per cent (99,404 workers) respectively.
Interestingly, the property development sector has growth at a rapid pace within the city with an 122.7 per cent increase equating to 11,405 additional workers being added to the area between 2012 and 2017.
“Professional and business services remains the fastest growing employment sector in the City of Sydney area,” City of Sydney manager of urban analytics Steven Hillier said.
“It’s the glue that holds other industries together such as financial services, ICT and the creative sector.”
It is predicted by analysts that by 2026 just three industries; finance, professional services and information media and telecommunications, will together make up more than 40 per cent of the city’s economy.
Lord Mayor Clover Moore said the figures confirmed Sydney’s position as a leading knowledge-based economy with over 162,000 workers involved in information communication technologies, higher education and research and professional & business services.
“By creating a city where people come first, we've seen that jobs and new businesses also follow,” Moore said.
“High quality developments close to jobs, shops and transport, efficient transport and safe and attractive ways for people to move around - these are all things we've actively pursued over the last fourteen years.”
Hillier said the figures painted a positive picture for Sydney’s economy.
“Professional and business services remains the fastest growing employment sector in the City of Sydney area. It’s the glue that holds other industries together such as financial services, ICT and the creative sector,” Hillier said.
Business floor space has also increased by 744,000 (4.5 per cent) square metres over the past five years, well behind the rate of employment growth.
The proportion of workers in open plan offices grew from 78 per cent in 2012 to 83 per cent in 2017, highlighting the adoption and continued popularity of open plan offices with more people opting to work in less space.
According to consultants BIS Oxford Economics, the office vacancy rate in the Sydney CBD will tighten to just 3 per cent by the end of 2019 while agents Colliers International expects the Sydney CBD to hit a 3.5 per cent vacancy rate by the middle of 2019.
Average A-grade office rents in Sydney recently passed $1,000 per square metre for the first time while the value of that space rose above $20,000 on average, according to commercial agents Savills Australia.