Parramatta Office Market – July 2018
Demand for office space in Parramatta’s property market is growing on the back of a lack of stock. The area has led the way in terms of several key market indicators over the past twelve months.
Average capital growth rates for Parramatta office space have increased by 30% in the last year (closely followed by Macquarie Park but well ahead of the still-impressive rates achieved by North Sydney and the Sydney CBD).
Office rental rates in Parramatta have increased by an average of more than 8.5% (higher than the average increases in the CBD and North Sydney, and much higher than Macquarie Park). A-grade office space in Parramatta averages about $635 gross per square meter, which is still more affordable than the inner-city or CBD.
Vacancy rates for office space in Parramatta are at 3% (slightly lower than the CBD, and significantly lower than the vacancy rates in Macquarie Park and North Sydney). The Parramatta market’s current low vacancy rates are also well below the area’s average for the past decade (7.5%). The present low levels of stock and high rent increases for office space in other areas of Sydney have contributed to these low vacancy rates.
Split by sectors, the Parramatta prime or A grade office space market currently has no available space, it is the tightest in Australia. The secondary market has experienced a significant drop in vacancy from 7.4% to 5.3%.
Strong Absorption Levels
After a negative net absorption level of 212 square metres in the previous six months, the Parramatta office market bounced back strongly to record 7,751 square metres in the six months to January 2018. That figure is one of its best-ever results. With strong tenant demand and no prime space available on the market, the peak was recorded in the secondary market.
The Parramatta office space market has the potential to become the second largest in Sydney, overtaking North Sydney and potentially Macquarie Park in the next decade. More than 600,000 square metres of new office projects are in the pipeline on the back of the rapid population growth that’s occurring in Western Sydney and the supply shortages in other major CBD markets.
Here’s an overview of all upcoming office developments in the Parramatta area for to next 4 to 5 years: