Consulting firm EY commits to its Sydney CBD base for at least the next decade

In one of the largest leasing deals of this cycle, financial services firm EY has agreed to remain as anchor at 200 George Street in Sydney until the end of 2036.

Charter Hall’s proposed Chifley South development in the Sydney CBD.

The race is on for top office space in Australia’s capitals, with top tier firms running out of options to house staff in prime towers.

After years of negative sentiment in the wake of the pandemic about the state of the office market, big companies are now signing up to spaces they believe they will need in a recovery.

In one of the largest leasing deals of this cycle, financial services firm EY has agreed to remain as anchor at 200 George Street until the end of 2036, landlords Mirvac and M&G Real Estate said.

The 10-year commitment will see the firm stay at the building that has been its Sydney base since 2016. The firm is paying a net rent of about $1550 per sq m, industry players said.

In a signal to the market that it remains upbeat about the under-pressure consulting industry, EY has recommitted to its 25,850sq m space.

With its distinctively shaped design, the EY Centre was one of the first of a new breed of “smart buildings” in Australia. It has a world-first timber and glass closed cavity facade system, giving it a unique appearance with shimmering organic, golden-hued curves.

Mirvac has also been winning tenants at its nearby 55 Pitt Street development, and rivals including Charter Hall have called out the tight conditions at the top end of the office market.

Real estate agency Colliers said there had been a recovery of effective rents across the nation, as they were headed to pre-Covid peaks by the end of 2026.

EY building at 200 George St.

A quarterly growth rate of 1.8 per cent nationally was led by incentive stabilising, coupled with the acceleration of face rental growth for premium grade assets, according to the firm. It said competition for space rose in the core of the Sydney CBD and in Brisbane’s CBD.

Positive face rental growth, alongside a stabilisation of incentives over the last 12–18 months, has meant that the average national CBD net effective rent is now only at a 9 per cent discount to peak values – well down on the peak discount of 16 per cent in December 2021.

“We expect that effective rents will hit the same level nationally as the pre-pandemic peak by the end of 2026, with strong growth bolstered by stable incentives and significant growth in face rents,” Colliers head of office leasing Cameron Williams said.

The shortage of space has partly been driven by the jump in construction costs, which has made building new towers prohibitive.

“We have officially entered a period below the long-term average supply additions after the last tranche of supply hit the market in 2024. The projected average supply over the next three years is 50 per cent below the 20-year average and 45 per cent below the 10-year average,” Mr Williams said.

“New supply will moderate over the rest of 2025 and through to 2027, allowing vacancy to continue to stabilise and tighten in prime and premium assets in markets like Sydney and Brisbane CBD, where the shortfall in supply is exacerbated,” he added.

JLL Research said that in five of the six CBD office markets it monitored, it had recorded positive net absorption of space over the quarter.

Australia’s CBD office market net absorption totalled 43,900sq m over the quarter and 177,700sq m over the 12 months to the end of March. The national CBD office market vacancy rate dipped 0.3 percentage points to 14.9 per cent.

JLL head of office leasing, Australia, Tim O’Connor, said the Melbourne CBD was a laggard in the national office leasing market recovery. “However, CBD foot traffic and office utilisation have been steadily improving over the past 12 months,” he said. ”Several organisations centralised their operations into the Melbourne CBD over the quarter, supporting the positive net absorption result,” Mr O’Connor said.

He said the Sydney CBD had a fragmented office market and there was competition for space for high quality assets in the core precinct, while tenant leverage was greater in the western corridor and midtown.

Originally published as Consulting firm EY commits to its Sydney CBD base for at least the next decade