Parramatta Blog

In recent times, the term "flight to quality" has been frequently used to describe the trend of businesses and investors moving towards higher quality commercial office spaces in order to secure better facilities, amenities, and overall quality of the property. This trend is typically observed during periods of economic uncertainty or volatility, when businesses and investors become more risk-averse and seek out more secure and reliable assets.

This trend has been gaining pace over the past few years. According to industry reports, demand for higher quality office spaces has been steadily increasing, while demand for lower quality or older buildings has been declining. This inclination is being driven by a number of factors, including changing workplace trends, evolving tenant preferences, and an overall shift towards more sustainable and energy-efficient buildings.

One of the main drivers of the flight to quality trend in Sydney's commercial office market is the changing nature of the workplace. There has been a shift towards more flexible and collaborative work environments, with businesses increasingly adopting open-plan layouts and shared workspaces. This has led to a growing demand for high-quality office spaces that are designed to support these new ways of working, with features such as natural light, flexible layouts, and modern technology infrastructure.

Another key factor driving the flight to quality trend in Sydney's commercial office market is the increasing focus on sustainability and energy efficiency. Businesses are increasingly looking for office spaces that are environmentally friendly and have low carbon footprints. This has led to a growing demand for buildings that are certified as green or sustainable, with features such as energy-efficient lighting, heating, and cooling systems, and water conservation measures.

The flight to quality trend has also had a significant impact on the rental and investment markets in Sydney's commercial office sector. As demand for high-quality office spaces has increased, so too has the rental premium for these properties. This has led to a widening gap between the rental rates for higher quality and lower quality office spaces, with the former commanding significantly higher rents.

With this unprecedented demand for new product that we are currently experiencing, the flight to quality story is more relevant than ever, and this will allow the market to maintain a healthy supply/demand balance for the next few years.

*WRITTEN BY JAYDEN AYOUB | COMMERCIAL SALES & LEASING