North Sydney's pre-existing status as a media and tech hotspot coupled with the growing trend of occupiers re-examining their space location and requirements due to COVID-19 could result in the region becoming an extension of the Sydney CBD market, according to JLL.

The firm's Head of Northern Sydney Office Leasing, Paul Lynch said a range of tech and media companies had pre-committed to new and refurbished developments in the North Sydney office market across the past four years, with some either scheduled to move in or already in the process of migrating during the third quarter of 2020, taking up just over 41,000 square metres of office space combined.

“Nine Network and Microsoft are moving into North Sydney from outside the market," he said

"These two pillars of the entertainment and IT industries bode positively for future groups to relocate to the market and see North Sydney regain its mantle as a media and tech hub."

North Sydney tenant pre-commitments - At a glance:

• Nine Network preleased 25,000 sqm at 1 Denison Street
• NBN moved into 20,358 sqm in 100 Mount Street
• Vodafone moved into 12,000 sqm at 177 Pacific Highway
• Microsoft preleased 10,655 sqm in 1 Denison Street
• oOh!Media moved into 6,858 sqm in 73 Miller Street
• SAP preleased 5,706 sqm in 1 Denison Street
• Cisco moved into 4,000 sqm at 177 Pacific Highway
• NextGen.Net moved into 2,563 sqm in 100 Mount Street
• Citrix Systems moved into 1,241 sqm in 100 Mount Street

Moves by TMT companies into new/refurbished developments in North Sydney has totalled 88,400 sqm since 2016, according to JLL Research.  

JLL’s NSW Head of Office Leasing, Dan Kernaghan said a potential by-product of COVID-19 environment was for companies to consider alternative office models such as a hybrid approach of a hub and spoke model.

“This hub and spoke model could be likened to an urban and suburban office solution, where a hub office is located in CBD areas and a spoke office is located in suburban areas, closer to where the employees live," he said.

“If we see more adoption of this split office accommodation strategy, that could also see growth for the North Sydney office precinct, leading to an extension of the Sydney CBD to ‘CBD North’.” 

JLL's The Future of Global Office Demand report - released in June - stated that the COVID-19 pandemic would accelerate the trend of ‘distributed urbanisation’, with the fast-track evolution of digitally-enabled, hyperconnected networks of cities that revolve around major cities such as New York, London, Paris, Tokyo and Shanghai.

Source: JLL

According to JLL, distributed urbanisation also offers a more sustainable model based on reduced commuting, flexible working and micro-mobility.

Mr Kernaghan said the trend of occupiers splitting their operation between geographic locations in a hub and spoke model had already been started by the NSW Government and large corporates "a few years ago".

“The NSW Government began moving a number of government agencies to 4 Parramatta Square early this year," he said.

"Herbert Smith Freehills moved part of their workforce to Macquarie Park in 2018 with the opening of an innovative business hub.  

"Also in 2018, Allianz moved their IT teams to North Sydney.

“While we haven’t seen any recent moves to suggest that the hub and spoke trend has gained momentum, we do expect it to continue over the medium term and could see an acceleration due to companies considering their current locations, due to COVID-19."

Click here to view JLL The Future of Office Demand report.

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