South Sydney market benefits from major movers

28 January 2022

The South Sydney office market is fast-becoming a go-to destination for large corporations looking for an expanding and affordable alternative to the CBD.

While South Sydney has always been a dynamic precinct, the decision by Ampol to relocate to Alexandria in 2019 has reshaped the face of the market. Ampol late last year moved into their new 9,000sqm headquarters at 29 Bourke Rd, part of the newly developed Green Square complex.

Ampol’s move is part of a bigger trend, according to Colliers National Director South Sydney Michael Crombie, who said he and his team had seen close to 47,000sqm of space leased in South Sydney across 56 deals during 2021.

“Traditionally an industrial area, it has now been transformed into a mixed-use hub full of high rise residential, booming retail and some wonderful examples of campus-style office spaces,” Mr Crombie said. “Ampol’s move to Alexandria represents the beginning of a significant shift, as ASX-listed, superior quality tenants move their head offices to Alexandria and Sydney’s south,”

Alexandria in particular saw 29 deals at an area of 25,470sqm leased, with much of this small and nimble occupiers within a 500-3000sqm range.

Recent Colliers Research data shows rents in South Sydney have increased by 12.9 per cent over the past 12 months to September 2021, with average net face rents for A-grade accommodation generally ranging between $400 per sqm p.a. to $795 per sqm p.a. The high level of infrastructure investment in the market, such as the WestConnex, Waterloo Metro Station and Green Square Town Centre urban renewal project, has enhanced accessibility and the profile of the area.

“Alexandria has many pockets of commercial density, yet over time, these spaces will merge together as the whole suburb becomes one eclectic mix of office – new and old,” Mr Crombie said. “The city fringe markets of Pyrmont and Surry Hills have such limited stock, so these rents are climbing. Alexandria always provides such good value for money.”

With spaces above 2,000sqm extremely limited, a rare opportunity exists to sub-lease 2,690sqm’s of Ampol’s new headquarters. The site offers inner-city like amenities with a rich industrial past, has access to external balconies and provides the potential for a long-term tenure with a trusted head tenant. There are two tenancy options available ranging in size from 1,103sqm to 1,460sqm. Mr Crombie is leasing the site with Karbon Property’s Joshua Watts and James McCourt.

“The incredible offering as part of the new Ampol headquarters provides potential tenants with a fresh, collaborative workspace in the heart of a rapidly expanding precinct,” Mr Crombie said.

“The four-level boutique office building adjoining Perry Park, which was designed by Cottee Parker and constructed by Hutchinson Builders, is already one of Alexandria’s most sought-after commercial addresses,” Mr Watts added.

With the current supply of modern, quality floors in well-regarded buildings running low, developers are active in the region. There are currently 11 projects underway with 50,000sqm (likely/confirmed), which is set to boost new office supply.

Ampol’s Chief Development Officer Dave Bridger said the company’s move to southern Sydney was spurred on by the desire to create a modern and engaging space that would allow them to bring their vision to life. “The South Sydney region is a dynamic and ever-evolving area with emerging retail and hospitality venues and spaces. We are witnessing first-hand the evolution of Alexandria from a light industrial and manufacturing precinct to a business hub supported by rail at Green Square and with close proximity to Sydney Airport,” Mr Bridger said.