Short-term forecasts for Sydney's north shore predict that vacancy numbers will slowly decline because of increasing demand coupled with low supply according to a report made by commercial real estate services firm CB Richard Ellis in its Sydney Metropolitan Office MarketView.

CBRE Senior Director, Tom Bartlett said demand in North Sydney had been particularly strong during 2010. "It is beginning to look as though there may be a lack of A grade space in North Sydney which should result in a re-evaluation of new office developments in the medium term future," Bartlett said. "The relocation of tenants such as Coca Cola, Vodafone and Carnival Cruise Lines has resulted in net absorption of over 24,381 square meters for the first half of the year. This is the first positive result since January 2009."
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However, CBRE Global Research and Consulting Manager Luke Nixon said construction activity was likely to be relatively limited throughout the broader north shore market over the next four years despite a number of prime development sites being available.

"It is expected that at least one new building will be completed prior to the end of 2014," Nixon added. "Potential development sites in North Sydney would provide 35,000 square meters of new office space at 90-100 Mount Street, 50,000 square meters at the Eastmark site and 30,000 square meters at 199 Pacific Highway. Developments are also being considered at Crows Nest/St Leonards at 88 Christie Street and the Thomas Street car park site at Chatswood. However, the likelihood of these projects proceeding and their projected time frame will depend on pre-commitments."

The report says that when it comes to rentals, North Sydney will register the highest rental growth in the area over the next five years due to its lower vacancy rate and higher tenant demand.