Values and rents continue to surge in Sydney’s divergent strata office market

14 April 2023

 Benchmark setting transactions in one of Sydney’s most tightly held buildings, BMA House, are indicative of the sustained high levels of demand that continue to outstrip the supply of strata office space, according to JLL.

Steeped in history, the premium office suites in the British Medical Association’s heritage-listed 1920s BMA Houseat 135-137 Macquarie Street are held for an average of 30-50 years.

JLL’s Capital Markets NSW Associate Director, Willem Watson has advised on four suites in BMA House over the past 24 months, all setting benchmark pricing in the esteemed building.

Mr Watson is currently managing the sale of a fifth suite, Suite 104, which is being offered to the market for the first time in 37 years.

Mr Watson said, “The strata suites in BMA House are some of the most tightly held offices in Sydney, and in some cases held by the same owner for more than 50 years. We typically only see these office spaces come to market when an owner leaves the workforce.

“More broadly, supply constraints continue to support higher pricing as strata stock is withdrawn from the market through institutional investment and government resumptions. We are seeing an increased number of participants competing for reduced stock levels in what can only be described as a shrinking market,” he said.

JLL has transacted more than $130 million of Sydney strata office assets in the past 12 months.

Mr Watson said, “As a result of reduced supply and increased demand we are seeing building and city records consistently broken and large increases in capital growth realised as owners take advantage of strong sector conditions despite surrounding uncertainty in other financial markets.

“Liquidity of premium stock remains strong, particularly in the top echelon of Sydney’s strata stock. Further, the suites in the prestigious BMA House are so tightly held, driving returns to even higher levels,” said Mr Watson.

JLL’s Office Leasing NSW Senior Executive, William Conry has been appointed to advise on the lease of five tenancies in BMA House, also setting benchmark rents.

Mr Conry said, “The scarcity of strata office suites in Sydney has only increased since the acquisitions made by the NSW Government to make way for the city’s Metro West stations. This has placed upward pressure on occupier demand for strata office space and has resulted in a surge in rents.

“This is particularly prevalent in the Premium Grade strata space as occupiers are flooding to suites with good natural light, in renowned buildings with strong tenant reputation and in the financial core of the CBD – as is the case with BMA House,” said Mr Conry.

Macquarie Street is widely known as the Harley Street of Sydney because of the proliferation of medical chambers and surgeries, and the presence of a number of medical professional institutions. Similarly to London’s Harley Street, Macquarie Street has a long standing reputation where people choose to travel significant distances to see specialists in this precinct.