Sydney office rents are expected to remain steady in 2022, according to Cushman and Wakefield Australia Head of Research John Sears.

“We’re forecasting rents to be fairly stable through 2022 and then starting to see some improvement thereafter,” Sears told the recent NSW Property Market Outlook 2022 event.

Sears said grade-A net effective rents in Sydney’s office markets declined significantly during the pandemic, with prime net effective rents falling about 20% in the CBD.

The fall in rents was consistent with the rise in the vacancy rates during the pandemic, he said.

Sears said the Sydney office vacancy rate was the lowest it had ever been prior to the pandemic.

“[The Sydney CBD office vacancy rate] shot up in 2020 to about 9% or roughly about 10% on average and it didn’t change too much last year,” he said.

Sears said it was a similar pattern across the other metro markets around Sydney with big vacancy rises in 2020 when the pandemic hit.

Vacancy rates then stabilised during 2021 despite the Delta variant and resulting lockdowns and restrictions.

However, the latest data showed that there was very little change during the fourth quarter of 2021, suggesting that rents had stabilised near a bottom.

Looking at supply and demand, Sears said the demand from stronger employment growth would be tempered by the working from home trend.

“There’s quite a bit of supply this year, potentially a lot of refurb space along with Salesforce tower and Quay Quarter tower and so forth coming online and that’s probably likely to keep the vacancy rate up at around this 10% level for the next few years,” he said.

“And because we’ve got relatively high vacancy moving forward for the next few years, we don’t expect too much of an impact on rents.”