Parramatta CBD continues to be the best performing office markets in the country with vacancy below all major city CBD locations and enjoying the highest occupancy of any metropolitan market of its size. High employment demand and the growing interest from occupiers looking to shelter from the unaffordable Sydney CBD have resulted in these low vacancy results and growing rental rates. These improved results coupled with the completion (and ongoing construction) of high quality A grade premises has not gone unnoticed by institutional buyers who have been instrumental in reducing yields to new long term lows for Parramatta.
While cranes scatter the Parramatta CBD skyline, no new supply was added to the office market in the six months to January 2018, a small refurbishment was cancelled out by the withdrawal of stock resulting in a net supply of -916sqm. Soon to be added to the market however is 105 Philip Street due for completion mid 2018 adding 25,000sqm of A grade stock to the market, fully committed to the Department of Education. This will be followed in late 2019 by Stage 4 of Parramatta City Council’s Parramatta Square development which is 80,000sqm in size; Stage 3 of this project is also currently undergoing site works with the 46,000sqm office building expected to be completed in late 2020.
With these projects already featuring close to full commitment and the residential apartment market showing signs of dampening there has been greater emphasis on allowing greater quality commercial additions in Parramatta. As such, there are now a number of new projects within the development pipeline with the ability to adda further 140,000sqm of office space post Parramatta Square including the development at Westfield which has expanded its office component from 35,000sqm to 100,000sqm and currently awaiting council approval. Net absorption has shown strong results with 7,751sqm taken up over this period most notably across the secondary markets.