How Sydney’s new metro will transform the office market

Deal volume already surged 54% YoY to AU$4.8b over the year to October 2024.

In a recent report, Savills highlighted that enhanced transportation links are boosting the Sydney CBD’s pulling power. The Sydney Metro extension, completed in August 2024, now connects Chatswood on the North Shore to Sydenham in the south-west, passing through Victoria Cross in North Sydney, Barangaroo in the north-west of the CBD, and Martin Place in the CBD Core.

The new metro service enables rapid transit times, allowing passengers to travel between Martin Place and Barangaroo in just 2 minutes, to Victoria Cross in under 3 minutes, and from Chatswood to Barangaroo in 9 minutes.

Here’s more from Savills:

The extension of the Sydney Metro, coupled with rising daily office occupancy rates, are driving an increase in public transport trips to the CBD. Transport NSW reports that average daily trips to the CBD on all modes of public transport increased by 15% over the year to September 2024, reaching over 90% of 2019 levels.

Over the past couple of years, tenants have demonstrated a strong preference for office space in the CBD Core. However, enhanced connectivity provided by the Sydney Metro has the potential to increase the appeal of CBD precincts outside the Core.

The addition of new stations will boost foot traffic in Midtown and the Western Corridor, areas which have faced challenges in attracting and retaining tenants, partly due to an oversupply of space, less available fitted-out space, and a less favourable location for some tenants compared to other parts of the CBD where transport connectivity had previously been more appealing.

Underscoring Sydney’s increasing appeal, office investment has risen sharply since midyear. Deal volume (for deals AU$10m+) over the year to October 2024 reached AU$4.8 billion, up 54% from the same period in 2023 when liquidity was very low. Sydney has been an increasing focal point for capital during this period, accounting for 63% of office acquisitions in Australia over the year to October, up from a 10-year average of 49%.