Investa, Gwynvil's 60 Martin Place sets record for Sydney's highest rent

Flexible workspace provider International Workplace Group has agreed terms on 4500 square metres within the building’s podium across levels one to three, with plans to use them as a co-working hub called “Spaces”.

Financial services group, Munich Re secured 2600 square metres of space on levels 27 and 28, moving out of its own building on Macquarie Street. One of Japan’s three “megabanks”, Mizuho Bank, will relocate from 60 Margaret Street to levels 29 and 30, occupying 1900 square metres.

Higher floors were leased at an annual net face rent of more than $1800 square metre, while lower floors were averaging around a net annual face rent of between $1200 to $1300 a square metre, Investa group executive Michael Cook said.

“The interesting thing is that incentives had been stubborn, and we are into the teens. I am surprised prices have been sticky on the way down but it is a function of the fact that a lot of organisations struggle to justify the capital expenditure of a fitout,” Mr Cook said.

“There is more elasticity in rents than fitout costs. At the end of the day, however, I would rather have my incentives and rents a little higher because we are producing a cashflow, and I use the incentives to support a cashflow.”

Incentives, whether it’s rental rebates or fitout allowances, have come down from the mid-20 per cent mark that was once prevalent in the CBD. While decreasing incentives tend to indicate conditions are in landlords’ favour, especially with vacancy at record lows, the office leasing market is in a “delicately balanced” equilibrium, a condition landlords shouldn’t take for granted, Mr Cook said.

There is caution among tenants concerned with global economic and local political uncertainty, making them savvier negotiators and experts at making smaller spaces more efficient, he added.

“It’s a good market. Tenants are not necessarily stressed but neither are landlords. But there are no easy gets in a market like this,” he said.

“The 5000 square metre tenant is asking if they can get by with 4000. What balances it out for Sydney is its limited supply [of office space].”

CBD leasing agent Ray White’s Anthony Harris said the leasing record at 60 Martin Place was unprecedented, with the lack of supply the reason for the high rents.

“$1800 net or $2000 gross is a new benchmark high level never seen before,” he said.

Mr Cook said only four to five floors were still available for lease, with a couple of floors set aside for a carve-out of smaller 500 square metre to 800 square metre suites.

Other tenants which have committed to 60 Martin Place include Norton Rose Fullbright and Banco Chambers.