Major firms doing the shuffle
High-profile companies from infrastructure, energy, media and insurance all have briefs in the market with agencies to find new space.
QBE Insurance is one of the first to sign up with its new space at the top of 8 Chifley Square, owned by Mirvac and Singapore's K-REIT. It has been in the market for close to a year, looking for appropriate space as part of a plan to consolidate older, windowless sites across Sydney, including at 82 Pitt Street and 85 Harrington Street.
The 8 Chifley Square tower is anchored by lawyers Corrs, and is scheduled for completion late this year or early next.
Other groups seeking accommodation include Marsh, Origin Energy, construction group Theiss, digital media group Mi9 (formerly ninemsn) and consultancy Grant Thornton.
Google is also reviewing its options, although it has recently moved some staff into parts of 1 Darling Island Road, Pyrmont, anchored by Fairfax Media.
Lend Lease has also taken up 4000 square metres of space in 8 Shelley Street, for use by the team working on the redevelopment of the Sydney Exhibition and Convention Centre. It has a similar office in the Aon/Maritime Trade Towers at 201 Kent Street for the Barangaroo Delivery Authority.
Leasing agents say the latest round of mandates comes as the Sydney CBD is about to undergo a shift towards the western corridor with the opening of Barangaroo from 2015.
That will see Westpac open new, expanded offices, as well as Lend Lease relocating from 30 The Bond, KPMG moving from its present site at Shelley Street and PwC relocating from Tower Two at Darling Park, 201 Sussex Street.
It is expected that when Charter Hall starts the redevelopment of its 333 George Street tower, its staff could relocate to 1 Martin Place.
The Queensland Investment Corporation is spending about $20 million to upgrade its site at 52 Martin Place, which will be the new office for part of the NSW Treasury, moving from its present space at Governor Macquarie Tower.
The reshuffling and demand for new space comes as the office sector outperformed retail assets in the recent reporting season.
In general, the net operating income from office-only real estate investment trusts delivered an average growth of 4.5 per cent, versus 2.6 per cent from the retail sector.
According to analysts at Bank of America Merrill Lynch, office net operating income growth has been strong despite a relatively soft macro backdrop characterised by weak tenant demand and minimal market growth in effective rents.
"The saving grace in 2013 is the high weighting of the REITs to Sydney, where there is minimal new supply coming online," the analysts said.