Premium-grade office towers along the Eastern seaboard are now dominated by two landlords, Dexus and GPT.

It’s a situation which is likely to result in another round of rent upgrades in the medium term, according to agents.

After the completion of the takeover of the Commonwealth Office Property Fund, Dexus will own more than 25 per cent of Sydney’s premium skyscrapers and about 11 per cent of Melbourne high-grade offices.

That equates to about 75,000 people working in a Dexus-owned office block across the country.

GPT has struck a deal to buy five CPA assets from Dexus, to give it more than $10 billion of funds under management and make GPT the second biggest office landlord in the country.

Investa Office, Mirvac and Charter Hall own the lion’s share of the remaining A and B grade assets, some of which are earmarked for redevelopment into office or residential.

The dominance of two landlords is likely to mean tougher times for tenants, amid expectations of an improvement in office occupancy in the coming 12-18 months.

The largest amount of potential office space remains at Lend Lease’s proposed third tower at Barangaroo, which is yet to be leased. However, the rest of the space in Melbourne and Sydney that is empty is in lower-graded assets which will be taken off the market for redevelopment.

Jones Lang LaSalle recorded negative net absorption of 242,500 sqm across CBD office markets in 2013. As a result, the national CBD office market vacancy rate increased to 11.8 per cent.

But Tim O’Connor, Jones Lang LaSalle’s head of office leasing for Australia, said it was too simplistic to say the leasing market was challenging in 2013. “The sub 500 sqm cohort of the market was active, while a number of large pre-commitments were finalised,” he said.

“Furthermore, we noted a divergence between prime and secondary vacancy rates in 2013 – a number of occupiers capitalised on the availability of good quality office accommodation to relocate to better premises,” Mr O’Connor said.

‘‘Despite the negative net absorption figure and rise in vacancy, we saw signs of stabilisation in the Sydney and Melbourne CBD office markets. Vacancy actually tightened in Sydney (10.5 per cent) over the fourth quarter of 2013, while Melbourne only recorded a moderate rise in vacancy to 11 per cent.’’

Mr O’Connor said while forecasts show demand will be below trend in 2014, the national CBD office market vacancy rate is expected to tighten moderately over 2014.

‘‘Across CBD office markets, Jones Lang LaSalle forecast that supply additions in 2014 will be the lowest since 2002,’’ he said.

Richard Jones from JP Morgan said that office supply pipelines are modest.

‘‘The shining light is the prospect for more withdrawals for conversion to residential,” he said.