Sydney CBD laneways are in hot demand

The City of Sydney is forging ahead with its plan to make Sydney more appealing for residents and boost its standing as a liveable city through its new rezoning and planning strategies.
Nanjing Night Net

In the most recent Economist survey, Melbourne again outshone Sydney as one of the world’s most liveable cites, which has spurred on the northern capital to lift that profile.

This is happening with the “Manhattanisation” of Sydney through new apartment developments, such as Cbus plans above David Jones and the plethora of new restaurant and food precincts, such as DEXUS​ Property’s projects at Gateway, Circular Quay and ground floor at Grosvenor Place.

The City of Sydney Council has also released its Central Sydney Planning Strategy for development over the next 20 years, to bring Sydney back to life on the weekends as much as during the week.

It is said the proposed development guideline changes will create 100,000 more jobs and as this occurs amenity will be in high demand. According to Vince Kernahan, director Sydney CBD sales at Colliers International, as the demand for more amenity such as cafes, restaurants and bars increases, properties fronting laneways are in demand to provide the space.

The City of Sydney Council has a Laneway policy that identifies all lanes of interest and generally encourages owners of adjoining properties to activate their properties at street/lane level.

Laneways that have been successfully transformed include Bulletin Place, Tankstream Way, Angel Place and Rowe Street, which are home to China Lane restaurant, Baxter Inn and Felix restaurants.

Mr Kernahan and Tom O’Neill​, executive Sydney CBD sales at Colliers International, are selling a heritage-listed property at 362 Kent Street with rear lane access to Council Place.

An eight-level building, it has the potential for a reconfiguration of the ground and first floors to provide more retail space.

Mr O’Neill said small to medium boutique office and retail buildings are becoming rarer in Sydney as more new and larger buildings are being constructed.

“Many office and retail tenants are looking for properties that have character externally and modern internal finishes that offer a point of difference; 362 Kent Street will appeal to investors, developers and owner occupiers,” Mr O’Neill said.

Mr Kernahan added that buildings in the $10 million to $20 million category are the most sought after and the proposed LEP changes and the massive amount of new infrastructure projects as well as major projects such as Darling Harbour Live and Barangaroo are having a positive impact on all western corridor assets.

“We are seeing more opportunities with these style of assets to offer a range of uses to potential buyers,” Mr Kernahan said.

This grab for space comes as vacancy rates in Melbourne and Sydney’s CBD core retail markets have plummeted as international retailers and banks jostle for space.

Knight Frank head of research, Matt Whitby, said Sydney experienced the highest fall from 3.3 per cent last year to a current rate of 1.8 per cent while Melbourne fell from 3.2 per cent to 2.4 per cent over the same period, the lowest it’s been in five years.

Mr Whitby said arcade and laneway shops in Sydney and Melbourne have experienced positive absorption, underpinned by new boutique brands and specialty food services.

“The vacancy rate for arcades and laneways in Sydney has declined from 3.2 per cent in July 2015 to 1.5 per cent in July 2016 … Melbourne’s fell from 1 per cent to 0.7 per cent over the same period,” Mr Whitby said.

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