Sydney’s Southern CBD & Chinatown Driven by Diversity, Access and Technology

Wednesday 19 August 2015

Sydney’s Southern CBD & Chinatown Driven by Diversity, Access and Technology

 Sydney’s Southern CBD and Chinatown are generally considered to cover an area from Bathurst Street to Central Station, and from Elizabeth Street to Darling Harbour including Haymarket and a small part of Sydney. The area has varied facilities and some well-known features including: the Darling Harbour Precinct, Chinatown, Paddy’s Markets, TAFE and university campus, Central Station, Entertainment Centre, the Chinese Gardens and the new Sydney Convention Centre due to open in December 2016 and capable of hosting 27,000 people.

 As evidenced by the recent sell-out of new projects, this is also a very popular and growing area for residential development with a current residential population of some 16,600 people living mainly in high-density housing. The majority of whom were born overseas predominantly from China and other parts of Asia.

 

Part of Sydney’s Spirited Growth

Currently NSW and Sydney in particular is in the midst of a new growth phase, and Sydney’s CBD in particular is well advanced into a decade of major change, a period of upheaval that will redefine the city as a more complex, diverse and interesting place with varied opportunities for residents, business and visitors alike.

 It’s sensible to suggest that much of this transformation will see the city emerge as a truly more international and culturally rich city.

 Across the Australian economy, Sydney is expected to be the stand-out performer over the next 12-24 months and the Southern CBD and Chinatown will benefit from this growth, driven by access, diversity of development and technology.

 But the area’s appeal will also be influenced by two key demographics, the predominance of the Asian/Chinese population mix and the much younger and more qualified nature of the local workforce.

 The start of this now firmly established transformation can be pin-pointed a little sooner than the current cycle with the re-development of the World Square precinct between 1999-2007. This area, along with Darling Harbour is the epicentre of the cities southern sector. These are destinations of international significance attracting residents, visitors and importantly a variety of businesses.

 Beyond this immediate area and further north, the transformation of the former Centrepoint (after being sold by the AMP mid-way in 2002) into Westfield Sydney opening 2012 alongside other big-ticket developments like Barrangaroo, and further south Broadway are together all helping re-shaping Sydney.

 

Diversity a Key Attraction

Sydney’s Southern CBD and Chinatownare very diverse markets in terms of the nature of commercial space. This fact represents a very interesting and key aspect of the area’s appeal.

 This is a character filled market responding to the fact that not everyone wants or needs to be in the central CBD and in reality nor can they afford to.

 The area is currently very active, even hot market with a good measure of deals taking place with in excess of 5000sqm of space currently being taken up across the southern end of Pitt, Sussex, Goulburn and Castlereagh Streets.

 Much of the activity is driven by the immediate or the prospect of short-term residential conversion and this is forcing tenants hands but this is also creating opportunities.

 The result is that for some occupiers the office market is an ideal short-term opportunity. The area offers flexibility, and is very convenient with excellent facilities extending to key questions like transport access, retail and services.

 Currently a high proportion of the activity is focused on development plans for the area until 2018 and while the resulting space requirements are mixed there is demand to 5000 sqm.

 

Attractive Rentals

The easy access to varied space options is also enhanced by the zone’s competitive rentals, which are currently sitting around $500 - $600/sqm by comparison to the core CBD, or the northern CBD at $700 - $1200+/sqm.

 The area is attractive to the education sector, creative users, communications users like radio stations and publishers, law and industries serving the Chinese community including real estate. Real estate services are currently very active in part reflecting the continued in-flow of Chinese based development and investment capital.

 This mix of media, education, construction & development and real estate services is producing a unique character. The area is home to numerous sites part of future development sites, land banks for residential projects. This trend will continue to put further pressure on existing space, as it is either withdrawn from the market or only available for short-term occupants.

 However in the longer-term many new developments will have a percentage of mixed-use as part of their planning envelope and including commercial floors. This new space may well continue to attract a wide cross-section of users and so carry on the areas unique appeal.

 

Diversity of Users and Space

The area’s flexibility comes from both by the variety of building with available space to lease and the variety of occupants.

 As a result of this level of flexibility and the absence of a concentration of particular users the area is broadly appealing.

 The accommodation requirements distinctive, by comparison with for example, the finance sector and so this creates a more flexible market.

 The flexibility resulting from the availability of different buildings and a wider cross-section of locations and tenancy sizes makes it conceivable for developers to acquire and build land banks, and gives users choice, so that the two markets are complimentary.

 

Great Access and Its Getting Better

The CBD and South East Light Rail will transform public transport here, providing additional high capacity public transport that is already accessible via the historic and well-established links to Central Station.

 The new 12km light rail route will link Circular Quay via George Street and Central, to Randwick and Kingsford and the benefits to the area will increase its wide-ranging commercial and residential appeal.

 A one kilometre pedestrian zone along George Street, from Hunter Street to Bathurst Street, will provide new opportunities for outdoor dining, creative spaces and entertainment between Town Hall and Wynyard further linking the Southern CBD, Chinatown and Darling Harbour.

 Completion of the light rail construction in 2019 will underwrite the area’s strong appeal at a time when much more residential and mixed-use development will be underway.

 The mixed use combining commercial, entertainment, retail and residential makes this one of Sydney’s most diverse market sectors and creates underlying demand and strength.