These three suburbs are Australia’s hottest office precincts

The once gloomy fringes of Australia’s biggest cities are proving a lure… for hipsters. 

Buildings with old school character and public transport access coupled with good food and entertainment options has resulted in office rents spiking in three of the most popular zones.

But experts predict the shift toward chic areas could see those same hotspots wane in popularity as more tenants move in.

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Sydney’s Surry Hills and Melbourne’s Cremorne and South Yarra are notching up some of the highest fringe office rents in Australia, with creative and digital industries showing particular interest.

JLL’s latest future cities report, Great Office Precincts, examines the fringe markets of Australia’s capital cities and unwraps why certain suburbs have become a runaway success with tenants.

Surry Hills, on the southern edge of Sydney’s CBD, has experienced a 95% increase in prime rents between 2012 and 2019.

Surry Hills office space is at a premium.

Tenants can expect to pay an average of $760 per sqm for the best spaces.

In Melbourne, Cremorne on the south-west tip of Richmond has experienced a 65% jump for the same period with prime rents up from $305 to $481 per sqm.

JLL’s research Australia senior director Annabel McFarlane says the top-performing precincts demonstrated a track record of attracting and retaining office tenants.

“Creative and innovative companies and start-ups have the potential to expand rapidly, and successful companies in the precinct are typically in growth industries,” she says.

“However, these precincts risk becoming victims of their own success as residents, workers and new developments increase density and congestion.”

Each precinct was assessed against a list of 15 metrics – public transport, urban amenity, brand and profile (including hipster appeal), among them.

Cremorne is enjoying considerable leasing interest.

The toolkit will help JLL identify future strong-performing office precincts.

The research team is tracking 283,200 sqm of potential office development in Melbourne’s Yarra precinct – close to half of it is located in Cremorne and South Yarra.

“If all of this proceeds, the office-based workforce in this area could more than double to nearly 18,400,” McFarlane says.

“Rising rents may drive out creative and small businesses that create culture and brand, to be replaced by larger, less nimble corporates.”

She says in Sydney, if Surry Hills continued at the same trajectory, organisations would be priced out and Redfern and Eveleigh would benefit.

The analysis found that overall proximity to a rail station reduces overall commute times for staff – and that was good for productivity.