CBRE

FIGURESISYDNEYCBDOFFICE|3Q25

LeasingdemandbeginstospreadoutsidetheCoreprecinctinQ32025

13.7%

CBDVacancyRate(+90bpsh-o-h)

1,560AUD/sqm

PrimeNetFaceRent(+1.5%q-0-q)

30.8%

PrimeIncentives(-130bpsq-0-q)

PrimeYield(-13bpsq0-q)

AUD1.36B

CBDOfficeInvestmentVolumesYTD2025(-64%y-0-y)

Note:Arrowsindicatechangefrompreviousquarter/halflyear.

FIGURE1a:SydneyCBDOffice|VacancyRateSummary

Indicator

Jul2025

Jan2025

Jul2024

H-o-HChange

Y--YChange

VacancyRate

13.7%

12.8%

11.6%

+90bps

+208bps

KeyPoints

-CBREreceived96leasingenquiriestotalling122,920sqminQ32025.Thiswasa10.8%improvementoverQ22025andthelargestquarterlyenquirytotalsince2023.

FIGURE1b:SydneyCBDCoreOffice|SummaryofPrimeMarketIndicators

Indicator

3Q25

2Q25

3Q24

Q--QChange

Y--YChange

NFR

AUD1,560

AUD1,538

1,496AUD

+1.5%

+4.3%

Incentives

30.8%

32.1%

32.0%

-130bps

-120bps

NER

AUD994

AUD955

934AUD

+4.1%

+6.5%

Yield

5.8%

5.9%

6.0%

-13bps

-25bps

-TheSydneyCBDsawthedeliveryof72,599sqmofofficespaceinH12025.Officedevelopmentissettoslowgoingforward.

-TheoverallCBDvacancyrateendedH12025at13.7%,anincreaseof90bpsfromthestartof2025.Increaseswereduelargelytothedeliveryofnewsupplyandoldstockwithdrawals

beingre-addedtomarketinventory

-IncreaseddemandforofficespaceacrosstheCBDhasstartedtodriverentalrategrowthandincentivetighteningacrossthemarket.Q32025markedthefirstquarterinseveralyearsthatincentivetighteningandeffectiverentgrowthwasrecordedintheCore,WalshBat,Midtown,andWesternCorridorprecincts.

Source:CBREResearch

-InvestmentactivityremainedmutedoverQ32025duetoalackofavailableproductGivenstrongdemandforhighqualityassets,caprateshavestartedtotightenincertainprecincts.

1

CBRERESEARCH◎2025CBRE,INC.

FIGURESISydneyCBDOffice|3Q25

2CBRERESEARCH◎2025CBRE,INC.

OfficeDemand

LeasingdemandcontinuestobuildacrossSydneyCBD

Leasingdemandhasshowedconsistentimprovementsincetheendof2024.ThistrendcontinuedinQ32025whenCBREreceivedleasingenquiriestotaling122,920sqm.Thiswasa10.8%improvementoverQ22025andthelargestquarterlyenquirytotalsince2023.

Whiletheflight-to-qualitytrendhaspersisted,signsofleasingappetiteinnon-Coreprecinctshasstartedtomaterializeover2025.TheWesternCorridorrecordedPrimenetabsorptionof22,276sqmoverthefirsthalf;thefirsttimetheprecincthasrecordedapositiveabsorptionfiguresince2022.It'sexpectedthatdemandfornon-CoreprecinctswillcontinuetobuildmomentumovercomingperiodsduetoenticingrentdifferentialsbetweenCoreandnon-CorepropertiesandtighteningvacancyratesinCorestockduetotheupcomingslowdowninnewsupply.

DespitethestrongperformanceoftheWesternCorridor,occupierscontinuedtoshowapreferenceforPrimegradespaceintheCoreprecinctoverH12025.PrimenetabsorptionintheCoreprecincttotalled13,492sqmoverthetrailingsix-monthperiod.ThismarkedthethirdconsecutiveperiodthattheCoreprecincthasrecordedpositivePrimenetabsorption.

NetabsorptiontotalsacrosstheremainingCBDprecinctswerefairlyneutralinH12025.TheWalshBayandSouthernprecinctseachrecordedpositiveabsorptiontotalsof4,542sqmand475sqm,whileTheRocksandMidtownprecinctsrecordednegativenetabsorptionof-4,988sqmand-3,951sqm.

Theflight-to-qualitytrendremainedevidentwhenlookingatnetabsorptiontotalsfortheoverallCBDbrokendownbybuildinggrade.ThehighestlevelsofleasingactivitycontinuedtobeseeninPremiumgradeassets.NetabsorptionofPremiumofficespacetotalled44,841sqmoverthefirsthalf.Eachoftheotherbuildinggradessawnegativeorneutralnetabsorptionoverthisperiod.ThistrendcontinuestobedrivenbythemigrationofoccupiersintonewlydeliveredPremium

gradestock.

FIGURE2:SydneyCBDOffice|LeasingEnquiryData

No.ofEnquiries

VolumeofEnquires(x1,000sqm)

180

160

140

120

100

80

60

40

20

0

Q4Q1Q2Q3Q4Q1Q2Q3

'1920202021

Q4Q1Q2Q3Q4Q1Q2Q3

20222023

160

140

120

100

80

60

40

20

0

Q4Q1Q2Q3

2024

Q1Q2Q3

2025

Q4

VolumeofEnquiries—No.ofEnquiries

Source:CBREResearch

FIGURE3:SydneyCBDOffce|6-MonthNetAbsorption(sqm)byPrecinctandbyBuildingGrade

■Prime■Secondary■Total

50,000

40,000

30,000

20,000

10,000

-10,000

-30,000

-20,000

WesternCoreSouthCorridor

Walsh

Bay

TheMidtownRocks

PremiumABCD

OverallCBD

*Barcutoffforpresentation.

Source:CBREResearch,PCA

FIGURESISydneyCBDOffice|3Q25

3CBRERESEARCH◎2025CBRE,INC.

Supply

FinalripplesofsupplywavehittheSydneyCBDin2025

TheSydneyCBDsawthedeliveryof72,599sqmofofficespaceinH12025.Thisfigureincludedthedeliveryof33AlfredStreet(c.32,000sqm)and121CastlereaghStreet(11,500sqm).Eachofthesenewdevelopmentsweredeliveredwithstrongpre-leasinglevelssecured.Thefirsthalfsupplytotalalsoincludedthereintroductionof1ShelleyStreet(c.29,500sqm)totheCBDofficeinventoryfigureafteritwasremovedduetorefurbishmentsbroughtonbyMacquarie'sdeparturetotheirnewheadquartersabovetheMartinPlacemetro.

Officedevelopmentissettoslowgoingforwardandnewsupplyisforecasttototalonly28,300sqmoverthesecondhalfoftheyear.Thistotalincludesthedeliveryof270PittStreet(23,000sqm)and1KentStreet(5,300sqm).Themarketwillthengetaone-yearreprievefromnewsupplybeforethedeliveryof55PittStreet(63,000sqm),AtlassianHQ(57,000sqm),andChifleyTowerSouth(53,000sqm)in2027.Leasinginterestforthese2027projectshasbeenverystrongandpre-leasingforthesethreedevelopmentsisnowover60%collectively.

Beyond2027,thesupplyoutlookremainsspeculativeduetochallengingdevelopmentconditionsincludingelevatedconstructionandfinancingcosts.Costpressurescoupledwiththeuncertaintyaroundlong-termleasingpre-commitmentshaveforceddeveloperstoreconsiderthetimingofnewconstructionprojects.It'snowlikelythat,following2027,thenextwaveofofficedevelopmentwon'toccuruntil2032orlater.

FIGURE4:SydneyCBDOffice|UpcomingMajorDevelopmentProjectsTotalNLA(sqm)

70,000

60,000

50,000

40,000

30,000

20,000

10,000

33AlfredSt270PittSt1211KentStCastlereagh

St

20252026

ZNewPrecommitments2RefurbPrecommitments

Note:EarlyFeasibilityandmootedprojectsnotshown.

Source:CBREResearch

55PittStAtlassianHQChifleySouth

2027

■New

■Refurb

FIGURE5:SydneyCBDOffice|Historical&ForecastNewSupply

TotalNLA(sqm)

300,000

250,000

200,000

150,000

100,000

50,000

2017

2019

0

2015

2016

2018

2020

021

2022

2023

2024

2025

2026

2027

DAApplied/Approved

UnderConstruction

10-YearHistoricAverage

Complete

EarlyFeasibility

Source:CBREResearch,PCA

FIGURESISydneyCBDOffice|3Q25

4CBRERESEARCH◎2025CBRE,INC.

Vacancy

CBDvacancyratesnearingtopofcycle

VacancyratesintheSydneyCBDincreasedmarginallyoverH12025duelargelytothedeliveryofnewsupplyandoldstockwithdrawalsbeingre-addedtoinventories.TheoverallCBDvacancyrateendedH12025at13.7%,anincreaseof90bpsfromthestartof2025.Whilevacancyratesincreased,theamountofoccupiedstockintheSydneyCBDincreasedby10,298sqmoverthefirsthalfof2025.Thismarkedthesecondconsecutiveperiodthatoccupiedstockhasrisen,despitevacancyratesrisingduetonewsupply.SydneyCBDPrimeandSecondaryvacancyratesbothincreasedoverH12025,endingtheperiodat14.1%and12.9%,respectively.

TheCoreandWalshBayprecinctshavecontinuedtooutperformfromavacancyperspective.Primevacancyratesintheseprecinctsendedthefirsthalfat11.5%and9.0%,respectively,thelowestofanyCBDprecincts.

Givenrisingleasingenquirylevels,alackofforecastednewsupply,aslowdowninsubleaselistings,andtheongoingflight-to-qualitybyoccupiers,it'sexpectedthatCBDvacancyratesarenowattheirpeakforthiscycle.Vacancyratesareexpectedtotightenasnewsupplyslowsincomingyears.

FIGURE6:SydneyCBDOffice|LeasingMarketSummary

Market/Grade

Inventory

VacantSpace

Jul25

VacancyRateJul25

(6monthDiff)

NetAbsorption6months

Jul

25

Prime

3,548,655

sqm

500,382sqm

14.1%

(+82bps)

33,877sqm

Secondary

1,818,859

sqm

234,799sqm

12.9%

(+108bps)

-23,579sqm

Total

5,367,514

sqm

735,181sqm

13.7%

(+90bps)

10,298sqm

Source:PCA,CBREResearch

FIGURE7:SydneyCBDOffice|VacancyRatesbyGradeOverallVacancyRate

16.0%

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

0.0%

2.0%

H2

15

H1H2

2016

H1H2

2017

H1H2

2018

H1H2

2019

H1H2

2020

H1H2

2021

H1H2

2022

H1H2

2023

H1H2

2024

H1

25

—Prime—Secondary

Source:PCA,CBREResearch

FIGURESISydneyCBDOffice|3Q25

5CBRERESEARCH◎2025CBRE,INC.

Vacancy

Figure8:SydneyCBDOfficelVacancyRatesbyPrecinct

25%

23.0%

20%

18.1%

17.7%

15%

15.7%

13.4%

13.6%

12.3%

11.5%

10%

10.0%

9.0%

5%

Secondary

Secondary

econdary

5.2%

Secondary

Secondary

Secondary

Prime

Prime

Pime

Prime

Prime

0%

WalshBayCoreSouthernWesternCorridorMidtownTheRocks

Source:CBREResearch

FIGURESISydneyCBDOfficel3Q25

6CBRERESEARCH◎2025CBRE,INC.

RentalRate&IncentivesTrends

IncentivesbegintotightenasrentgrowthcontinuesinQ32025

TheincreaseddemandforofficespaceacrosstheCBDhasstartedtodriverentalrategrowthandincentivetighteningacrossprecinctsoutsideoftheCore.Inlightofacceleratingleasing

activityacrossthemarket,theCBDprecinctaveragePrimenetfacerentalratefigureendedQ32025at1,263AUD/sqm,anincreaseof1.2%quarter-over-quarter.SecondaryfacerentalratesalsoincreasedoverQ32025,endingtheperiodat876AUD/sqm,representinggrowthof0.1%.

Theflight-to-qualityseenoverrecentperiodshasresultedinPrimerentalratesintheCoreandWalshBayoutperformingtherestofthemarket.PrimenetfacerentalratesintheseprecinctsimprovedonceagaininQ32025,reaching1,560AUD/sqmand1,344AUD/sqm,respectively.

Thesefiguresrepresentedquarter-over-quartergrowthof1.5%and2.1%.WhilenetfacerentalratesgrowthwasmoresubduedacrosstheotherCBDprecincts,theMidtownandWestern

Corridorprecinctscontinuedtoseeimprovedfacerentgrowththisperiod.Netfacerentsinthesesubmarketsreached1,205AUD/sqmand1,143AUD/sqm,respectively,growingby0.9%and0.2%quarter-over-quarter.

Encouraginglyforthemarket,Q32025markedthefirstperiodinseveralyearswhereincentivestightenedineachoftheCore,WalshBay,Midtown,andWesternCorridorprecincts.Prime

incentivesinthesesubmarketsdeclinedby-130bps,-83bps,-100bps,and-225bps,

respectively,thisquarter.Againstthisbackdrop,theCBDaveragePrimeandSecondary

incentivefiguresendedtheperiodat37.5%and38.2%,respectively,eacheithertighteningorholdingstableoverQ32025..

Givenstillrisingfacerentalrates,andtighteningincentives,neteffectiverentsineachofthefourlargestCBDprecinctsallshowedgrowthoverQ32025.Core,WalshBay,Midtown,andWesternCorridorneteffectiverentsincreasedby4.1%,4.2%,3.2%,and6.0%quarter-over-

quarterthisperiod.

Weexpectthistrendwillcontinueasleasingactivityinnon-Coregeographiesclimbsoverthecomingyears.

FIGURE9:SydneyCBDOffice|PrecinctAveragePrimeNetFaceRents,NetEffectiveRents,andIncentives

NetRents(AUD/sqm)Incentives

PrimeIncentives(%)一PrimeNER(AUD/sqm)—PrimeNFR(AUD/sqm)

Source:CBREResearch

FIGURE10:SydneyCBDOffice|PrecinctAverageSecondaryNetFaceRents,NetEffectiveRents,andIncentives

NetRents(AUD/sqm)

900

800

700

600

500

400

300

ō88

202021

60.0%50.0%40.0%

30.0%20.0%10.0%

0.0%

δ88

2022

δ88

2024

δ88

2025

ō88

2023

Incentives

SecondaryIncentives(%)

一SecondaryNER(AUD/sqm)—SecondaryNFR(AUD/sqm)

Source:CBREResearch

FIGURESISydneyCBDOfficel3Q25

RentalRate&IncentivesSnapshot

Figure11:SydneyCBDOficelRentalRatesandIncentivesbyPrecinct

PRIME

CORE

MIDTOWN

SOUTH

WESTERNCORRIDOR

WALSHBAY

THEROCKS

GrossRentalRate(AUD/sqm)

$1,836

$1,408

$1,068

$1,345

$1,605

$1,025

%QoQ

1.2%

0.7%

Stable

0.2%

1.7%

Stable

%YoY

4.5%

2.7%

1.6%

3.6%

5.0%

Stable

NetFaceRentalRate(AUD/sqm)

$1,560

$1,205

$904

$1,143

$1,344

$849

%QoQ

1.5%

0.9%

Stable

0.2%

2.1%

-0.5%

%YoY

4.3%

2.4%

1.4%

2.4%

4.2%

-0.5%

Incentives

30.8%

38.3%

41.7%

44.0%

37.3%

35.7%

QoQChange(bps)

-130

-100

Stable

-225

-83

Stable

YoYChange(bps)

-120

-117

100

-42

-33

Stable

NetEffectiveRentalRate(AUD/sqm)

$994

$666

$459

$551

$745

$483

%QoQ

4.1%

3.2%

Stable

6.0%

4.2%

-0.9%

%YoY

6.5%

4.7%

-1.1%

2.2%

4.3%

-0.9%

SECONDARY

CORE

MIDTOWN

SOUTH

WESTERNCORRIDOR

WALSHBAY

THEROCKS

GrossRentalRate(AUD/sqm)

$1,249

$1,038

$1,002

$1,051

$1,144

$975

%QoQ

Stable

-0.7%

Stable

Stable

Stable

Stable

%YoY

1.8%

3.2%

0.3%

2.2%

-1.1%

Stable

NetFaceRentalRate(AUD/sqm)

$1,055

$875

$842

$858

$985

$837

%QoQ

Stable

-0.8%

Stable

Stable

Stable

2.1%

%YoY

1.0%

2.4%

Stable

2.2%

1.4%

2.1%

Incentives

36.7%

39.7%

38.8%

38.6%

39.5%

35.5%

QoQChange(bps)

Stable

Stable

Stable

Stable

Stable

Stable

YoYChange(bps)

57

143

25

-8

Stable

Stable

NetEffectiveRentalRate(AUD/sqm)

$596

$463

$454

$453

$533

$491

%QoQ

Stable

-1.0%

Stable

Stable

Stable

3.6%

%YoY

-0.7%

-1.4%

-0.8%

2.5%

3.6%

3.6%

Source:CBREResearch

7

CBRERESEARCH◎2025CBRE,INC.

FIGURESISydneyCBDOffice|3Q25

InvestmentMarket

CBDinvestmentactivityremainsmuted,butyieldsbegintighteninginQ32025

Aftermakingasignificantrecoveryover2024,OfficeinvestmentvolumesintheSydneyCBDhaveslowedslightlyover2025.InvestmentvolumesreachedAUD1,363millionoverthefirstthreequartersof2025.ThisputsthemarketonpacetoreachAUDc.2.0billionoverthefullyear,whichwouldbeadeclineof62%comparedto2024.ThelargejumpinInvestmentvolumesin2024wasdrivenbylargersales,andthemoremutedactivityover2025speakstothedifficultyofcompletingsuchtransactionsinthecurrentmarket.

Whienewtransactionactivityremainedsomewhatlimited,thiswasduetoalackofavailableassetsasopposedtoalackofdemandfrombuyers.Themarketisslowlyshiftingbacktoasellersmarketandthiscausedcapratesforthebestproductinthebestlocationstobegintighteningoverthequarter.IndicativeyieldsacrosstheSydneyCBDnowrangefrombetween5.8%forPrimeassetsintheCoreprecinctto8.2%forSecondaryassetsinTheRocks.

ThelackofproductavailableintheCBDshouldensurethatCBDinvestmentvolumesremainsomewhatmutedovertheremainderof2025,withthebulkofoutstandinginvestmentactivitytotakeplaceinMetrosubmarkets.

FIGURE12:SydneyCBDOffice|SalesActivity

SalesVolumes|AUD(millions)No.ofTransactions

10,00050

8,00040

6,00030

4,00020

2,000