The Parramatta CBD office market has been one of the strongest performing asset classes across Australia.
These quality results have continued into 2017 keeping vacancies the second lowest in the country at just 4.3%. Parramatta CBD however is still within a construction phase with over 180,000sqm of office stock currently under construction and poised to enter the market in the next few years. With vacant options limited and the current high employment demand, rents have seen upward momentum while the limited investment stock has seen yield pressured downwards.
The Parramatta skyline has been a hive of activity, with office and residential developments scattered around the city. Net office additions however have been limited in more recent times with increased withdrawal rates due to rezoning opportunities, more recently in the six months to July 2017 there has been no new supply added. However, there are a number of large scale developments currently underway including DEXUS Property Group’s recently sold 105 Phillip Street to Charter Hall which will see 25,000sqm completed in mid 2018 to be occupied by Department of Education. This will be followed by stages 3, 4 and 6 of Parramatta City Council’s Parramatta Square development which is expected to add 156,000sqm of office stock by
late 2019. Given that a high volume of this space is already committed, there has been some question surrounding the need for additional commercial development with the Council bringing some consideration to a change of use for already approved residential developments in the city.