One of Sydney’s big law firms, Ashurst, has begun planning to move into its third office in a decade.
The shift is part of a little-noticed development in the city’s commercial life: while most workers dabble in the office, causing an office glut, employers are struggling to find office space for busy lawyers, bankers, asset managers and other high-income earners.
1 Farrer Place is a Sydney landmark, comprising the Governor Macquarie and Governor Phillip towers.  
In the two years from June, 2021, rents for what agents call Sydney’s prime core – the top office buildings – have risen by 11.4 per cent, or twice the rest of the central business district, according to Colliers managing director of office leasing Cameron Williams.
While 30 per cent of Sydney office space is estimated to be empty, obtaining floors in the city’s most prestigious office buildings is difficult, agents say. These include 1 Chifley Square, 1 Farrer Place, 200 George Street, Aurora Place, Deutsche Bank Place, Gateway Sydney, the Salesforce Tower and Quay Quarter Tower.
“We’re getting no pushback on the rents we’re asking and the rents are at the top end of the market,” says Peter Menegazzo, chief executive of office property owner and developer Investa.
Investa plans to open, in the first three months of 2024, the 28-storey 39 Martin Place, which is likely to join the ranks of Sydney’s top-tier office buildings. Ashurst has already agreed to rent one-third of the building, which is a block from its existing offices at 5 Martin Place.
5 Martin Place, Sydney, the home of the Ashurst law firm. 
Ashurst’s decision is an example of why good office space remains expensive despite the reluctance of millions of Australians to return to their workplaces full-time.
When Ashurst moved in to 5 Martin Place in 2015, from Grosvenor Place, the 99-year-old building was one of Sydney’s hotter office buildings. It overlooked the Cenotaph and, as the Commonwealth Bank of Australia’s early headquarters, it had been immortalised in millions of tin money boxes.
Today, Ashurst seems to be suffering buyer’s remorse. The official reason for leaving the building is to help achieve “our vision to be the most progressive global law firm”.
But an industry source said Ashurst had found 5 Martin Place, which is owned by Dexus and CBUS Property, suffers from poor light and leaks during rain.
“We routinely review our office requirements,” an Ashurst spokesman says.
A Dexus spokesman says Ashurst’s move isn’t related to repairs that were required by the building.
No business likes to move. It is costly, and it disrupts staff. Competitor King & Wood Mallesons has been at Governor Phillip Tower, at 1 Farrer Place, for 30 years. Two weeks ago, it signed up for another 10.
Ashurst’s new offices will have about 29 per cent less floor space than it leased in 2015.
Even though many professional staff still want to work from home part-time, they expect fancy offices when they do go to work, property executives say. At the same time, investment banks, fund managers and top law firms haven’t shed staff like the big commercial banks and financial services firms, they say. In a tight labour market, the two forces are driving up the prices of high-end offices.
While the unemployment rate was 3.6 per cent in July, 80,500 white collar jobs were lost across Australia in the nine months ended March 31, according to the statistics bureau. In May, Investa estimated that CBD offices nationwide were occupied at half to 70 per cent of their pre-pandemic levels.
“The top-end legal and financial services groups in those buildings have not had the downsizings the biggest banks have had,” says Mark Tindale, a director at Cadigal Office Leasing, which helps businesses find offices. “If you are looking for a building for 100 people, it’s very, very difficult to find anything at the moment” in expensive buildings.
The two-tier market means that while large areas of office space remain empty, especially on Mondays and Fridays, when many people work from home, there is demand for new office buildings with high-speed lifts, plush conference rooms and deep-pile carpets.
Investa, which refers to the shift as the “Great Office Upgrade”, says that eight of the 10 big office buildings being built in Sydney, Melbourne and Brisbane have signed up large tenants. Most will open in 2024 or 2025.
The high-end office scarcity hasn’t helped office property trusts, though, because of investors’ fears about weakening demand and the impact of working from home.
Over the past year, Charter Hall shares have fallen by 20 per cent, Dexus shares are down 12 per cent, GPT Group shares are off 0.5 per cent and Lendlease shares have dropped by 26 per cent. Mirvac, which owns the EY Centre at 200 George St, is up 12 per cent.
Follow the topics, people and companies that matter to you.
Fetching latest articles
The Daily Habit of Successful People