“This historic low is well under the outstanding longer term 10-year average which has reduced to just 6.9 per cent, highlighting the quality results that have now been achieved for many years.”
Ray White Commercial NSW – Western Sydney Associate Director and Licensee in Charge Joseph Assaf said rental growth had moderated after robust growth results achieved in prior years, despite the continued low vacancy environment.
“Over the past five years, the high demand for office accommodation coupled with the addition of new quality stock, has ensured ceilings have been broken regarding rental rates,” Mr Assaf said.
“Currently, prime gross face rents average $630/sqm which represents limited growth of just 2.44 per cent over the last 12 months, albeit this remains up 5.12 per cent p.a. over the last five years.
“Affordability continues to be key for this market when compared to Sydney CBD market, which now averages more than $1,000/sqm (net) for prime space.”
Ms Rader said demand for investment remained high across the Parramatta office market.
“Market fundamentals continue to perform well, resulting in a flurry of smaller sales activity during late 2018, highlighting the acceptance of assets of varying quality by investors,” she said.
“33 Argyle Street changed hands in November 2018, the 5,248sq m office sold for for $40.8M on a partial leaseback to NSW Aboriginal Land Council, to a JV of two foreign buyers on a reported yield of 4.90 per cent.
“While in October 2018, the KPMG leased asset 91 Phillip Street, exchanged to international fund BlackRock, for $56.63M on a yield of 5.10 per cent.”
*Ray White Between the Lines commercial research – Parramatta CBD office market overview – February 2019.
**Pictures courtesy of Parramatta City Council.