Macquarie Park, Sydney’s fastest-growing office market, is adapting to meet new demands and unlocking fresh opportunities.
Transforming a large area of North Shore bushland, Macquarie Park began its rapid development in the early 2000s and established itself as an innovation hub. The precinct offered compelling advantages like modern facilities, large floorplates, abundant parking and competitive rents. It also offers unique opportunities for businesses to locate their office operations alongside R&D facilities and laboratories.
Major infrastructure developments including the M2 Motorway (1997), Lane Cove Tunnel (2007) and North Shore rail extension (2009) improved accessibility and attracted multinational tech and pharmaceutical firms.
Driven by this increasing demand, office stock tripled from 136,000 to 407,000 sqm between 2000 and 2007, making it the fastest-growing of all 19 JLL-tracked office markets. Despite rapid supply growth, vacancy fell to 3.3% by 2007. This happened due to significant pre-commitments and was supported by smaller firms taking advantage of rare opportunities to co-locate with major multinationals. By 2014, the market exceeded 700,000 sqm, housing technology giants, pharmaceutical companies, and government agencies.
Current market challenges
Today, Macquarie Park is navigating a new set of hurdles. The vacancy rates are at a historic high of 22.7%, a stark contrast to the 5.9% vacancy recorded in 2019. This shift is an impact of several key factors:
1. Changing work patterns
The widespread acceptance of hybrid working has created opportunities for to higher-grade, premium office spaces. The firms are reducing footprints and centralising in premium markets. High vacancy has elevated incentives across Sydney metro markets, minimising the rental impact of these moves.
2. Supply-demand imbalance
Strong pre-pandemic demand boosted development activity, with 93,000 sqm added over five years. This oversupply has exacerbated vacancy issues, and an additional 20,000 sqm expected through 2025 will intensify market pressures.
Figure 1: Macquarie Park market balance
Source: JLL Research, Q2 2025
3. Public transport weakening competitive advantages
Enhanced transport connectivity has diminished Macquarie Park's traditional benefits. Sydney Metro extensions now connect surrounding suburbs such as Epping to North Sydney in 24 minutes, only four minutes longer than the morning commute from Epping to Macquarie Park. This makes previously inaccessible markets viable alternatives. Combined with growing ESG considerations, this has reshaped tenant preferences.
Market transformation
The office market's decline has called for a shift in strategy. Asset owners must adapt as ageing, lower-grade buildings face structural vacancy. Many older properties require significant capital expenditure or complete refurbishments to meet modern tenant demands.
However, current market conditions coincide with increased government efforts to address Sydney's housing shortage. The Transport-Oriented Development (TOD) programme has unlocked capacity for 9,600 residential units through amended planning controls allowing high-density residential development and increased height allowances.
Meanwhile, the exponential growth in AI and digital storage is driving growth in data centre demand. Macquarie Park has emerged as a key location, offering older buildings on large parcels of land that are optimal for purpose-built construction.
The TOD program and growing data centre demand mean any of 70+ office assets could face redevelopment. While market-wide redevelopment remains unlikely, shifting preferences may catalyse targeted urban renewal. Asset owners are preparing for this repositioning. Stockland has plans approved for 510 build-to-rent units replacing 28,000 sqm at its Triniti business park. Similarly, Goodman Group has submitted plans for converting its 9,000 sqm office at 10 Julius Avenue into a data centre.
Despite these challenges, opportunities in the office sector remain. The market's unique offerings, large floorplates, ample parking, and co-location opportunities that drove early growth will be key to retaining core tenants. Growing alternatives, particularly life sciences, may enhance future demand.