Battle is on for CBD space Next time you are in the CBD, stop and look skywards. What you will note is that Sydney's office stock increasingly reflects the design and characteristics of the 1980s or earlier. Almost half of the Sydney CBD office market (5 million square metres) is 30 years or older. It's the oldest office market in Australia. Large corporations are aware of the functional obsolescence of some of Sydney's office space. Jones Lang LaSalle has recorded a rising vacancy rate for the Sydney CBD between 2007 and now. It reached 10.2 per cent at the end of 2012-13. Despite the rising vacancies, precommitment activity has increased in Sydney over the past 24 months. There is a symbiotic relationship between tenant, developer and investor. Large occupiers are seeking the next generation of office space. The highly fragmented nature of Sydney's vacancy limits the potential to consolidate multiple tenancies and achieve efficiency gains. Developers are actively courting these precommitment tenants to underwrite future earnings, while investor demand is strong for long-dated lease product. Jones Lang LaSalle estimates there is $5 of investment in this cohort of the market for every $1 of available product. Project completions in Sydney are expected to be well above trend over 2015 and 2016. There is, however, a misconception that completions equal supply. As Sydney's stock ages, a high proportion of backfill space will be withdrawn for refurbishment. There also is competition for sites in the CBD for alternative uses. The City of Sydney is recording strong population growth with the resident population projected to grow by about 42,700 residents or 23 per cent over the next decade. That could require up to an additional 35,600 units in the city. Commercial and residential development will reshape Sydney's skyline over the next decade. The development of International Towers Sydney at Barangaroo will create a public foreshore that connects King Street Wharf with Walsh Bay and form a 14-kilometre harbour foreshore. The redevelopment of 190-200 George Street, One Carrington Street and the balance of the Alfred, Pitt, Dalley and George streets site will regenerate the core, while the proposed redevelopment of 50 Bridge Street will boost Circular Quay. Tim O'Connor is the NSW director of leasing at Jones Lang LaSalle.