Parramatta office market goes from strength to strength

THE Parramatta CBD has continued to outperform most Australian office markets, according to Ray White’s latest Between the Lines* commercial research.

The report stated the city recorded the highest net absorption rate of any office market across the country, with this period highlighting the strong, ongoing demand for stock in Parramatta.

It went on to say vacancies continued to remain at lows unseen in other markets and prime stock absorption had been outstanding.

The outlook for Parramatta CBD continued to be bright; with new supply being added, albeit strongly committed, with tenants attracted to the high-quality assets Parramatta has to offer.

The ongoing investment into the city centre including infrastructure projects, would ensure Parramatta remained a competitive CBD office location for tenants, owners and investors.

Ray White Commercial Western Sydney Managing Director Peter Vines said Parramatta CBD had its largest influx of new supply to the market recorded since 1990.

“The completion of 62,174sq m, which was stage four of the Parramatta Square development, was heavily pre-committed by the State Government and was offset by three withdrawals totaling 10,528sq m,” Mr Vines said.

“With net absorption recorded at 47,201sq m, the slight mismatch in supply and demand resulted in the growth in total vacancy from 2.8 per cent in July 2019, to 3.2 per cent in January 2020.

“Given the sizable addition to this market, this tight vacancy position continues to highlight the strong ongoing demand for Parramatta accommodation.

“Looking ahead, we expect a similar trajectory, given the high volume of committed new supply expected to enter the market.”

Ray White Head of Research Vanessa Rader said the total vacancy position of the Parramatta CBD office market saw a minor uptick in January 2020, now represented by 24,228sq m across the total 768,421sq m market, or 3.2 per cent.

“A grade assets continue to be in hot demand, recording vacancy of just 0.4 per cent this period,” Ms Rader said.

“Some opportunities emerged in B grade assets with vacancy of 3.4 per cent recorded after a net absorption rate of -11,076sq m due to the relocation of tenants into the new Parramatta Square development.

“Secondary assets continue to grow vacancy, albeit at a limited rate due to the small size of their market. C grade assets recorded vacancy at nine per cent after take up of -3,907sq m, while D grade stock remains low at 4.4 per cent.”

Ray White Commercial Western Sydney Director Joseph Assaf said Parramatta CBD continued to increase on its sizable growth in rents over the past five plus years, as vacancies had sustained a prolonged low rate.

“Secondary assets have benefited from the limited availability of stock with the gap between prime and secondary rents narrowing in recent years as incentives continue to be eroded,” Mr Assaf said.

“While affordability has been questioned for the Parramatta prime markets, it remains competitive compared to the Sydney CBD which has also been impacted by low vacancy, keeping prime rents upwards of $1,000psqm.”