Sydney has recorded the fastest growth in office rents in the world in the year ending September, according to new research from Jones Lang LaSalle.

And Melbourne has ranked in second place.

JLL’s Q3 Global Office Index shows Sydney far exceeded all other markets for growth in office rents for the year, with a 30.1 per cent increase.  

Melbourne recorded 17.3 per cent year-on-year growth for the same period, putting it in second place globally.

Click here to read Jones Lang LaSalle's Office Index report in full.

JLL’s Head of Office Leasing – Australia, Tim O’Connor, said, “Two years ago, Sydney ranked number one, while Melbourne was ranked fifth.  

"While the Sydney story has continued on the back of centralisation, stock withdrawals and growth from the technology sector in particular, Melbourne is now following hot on the heels."

Lower vacanies have "been amplified by the lack of available new supply coming on line in the short term," said O'Connor.

JLL’s Victorian Managing Director, David Bowden said, “Melbourne’s CBD office market is benefiting from strong population growth which is fuelling business expansion in a diverse range of sectors."

Global Office Index - prime rents

Top 10 global performers - Q3 2017 (year-on-year)

Source: JLL, based on rents for grade A spaces.

American cities filled in the next four spots on the Index, with the San Francisco Peninsula in third with 12.9 per cent annual growth, New Jersey with 12.2 per cent, and Portland in fifth place 10.4 per cent.

O’Connor, said, "Sydney has consistently featured in the Top 10 Global performers rankings for the past 5 years and Melbourne for the past 2 years.

Global rental performance over the past 2 years

Source: JLL, 2 years Q3 2015 - Q3 2017.

Global rental performance over the past 5 years

Source: JLL, 5 years Q3 2012 - Q3 2017.

Overall, global office rents are rising faster than average

Overall, JLL’s Q3 Global Office Index shows rental growth for prime offices across the 125 major markets it covers rose by 2.7% year-on-year, well above the 10-year average of 1.6%.

JLL predicts that above-average global growth will continue, forecasting an increase of 3 per cent for 2017, and 2.3 per cent in 2018.

But JLL Head of Research – Australia, Andrew Ballantyne, said he expects Sydney and Melbourne rental growth to "ease back" from double digit rates in 2018, to rates above 7 per cent.

Click here to read Jones Lang LaSalle's Office Index report in full.

For more information or to discuss the report, email Andrew Ballantyne, head of research, JLL.

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