Sydney is the top office rental performer globally, according to JLL's Global Office Index for the first quarter orf 2017.
In the year to March 2017, Sydney leads the world's office rental growth at 28.9 per cent, followed by Stockholm at 20.8 per cent and Nashville in the US at 17.8 per cent. Melbourne came fifth at 14.8 per cent growth.
Other strong cities are Berlin at 16.7 per cent, and New Jersey and Portland in the US at 13.2 per cent and 12.2 per cent respectively.
"Supported by a strong New South Wales economy, a number of industries drove leasing demand and rental growth in Sydney. These included the professional services, education and public sectors. We have also observed the continued expansion of co-working and serviced office providers across the CBD," JLL's Tim O'Connor said.
Mr O'Connor also said Melbourne's rental growth would be positive against strong quarterly net absorption.
There are 347,800sq m of office space under construction in the Melbourne CBD. These developments are expected to complete between 2017 and 2020 and 53 per cent of the space has a lease pre-commitment.
Further demonstrating the strength of Sydney's office rental growth, Sydney is up 9.4 per cent in the quarter against a total growth of 1 per cent for Asia Pacific. Year on year, Asia Pacific's office rental growth was 2.9 per cent.
Despite an increased volume of supply projected for Asia Pacific in 2017, global economic and political uncertainty have dampened leasing activity to the extent of lowering transactions by up to 5 per cent, compared to 2016.
By the end of 2017, JLL expects Asia Pacific rent growth to go up by only another 1 per cent to 2 per cent.
Sydney and Melbourne will be the top rental performers in Asia Pacific in 2017, while Shanghai, Beijing and Seoul will join Singapore in negative rental territory, JLL says.
For the quarter, after Sydney, Riyadh office rents grew 5.9 per cent, Santiago in Chile by 5.3 per cent and Austin in the US by 5.1 per cent.
