But Alan James from LJH Commercial, Parramatta, said the outlook in the short term was for a slight increase in the A-grade and B-grade vacancy rate and a continuation in 2013 of the solid demand for C-grade and D-grade stock.
With 25,050sqm of new space in the now-completed Eclipse Tower, the vacancy rate will rise to more than 11% in the short term, but with signs of life returning to the NSW economy, this should trend downwards in 2013/14.
“With the completion of Eclipse Tower and the pre-lease tenants taking occupancy, Parramatta will experience an increase in its A-grade and B grade vacancy rate,” Mr James told WSBA.
“I expect there to continue to be an increase in demand and uptake of C and D grade property during 2013 as there was in 2012. This is partly due to the active residential development market in the Parramatta redeveloping these sites.
“The long term outlook is for a lengthy upswing and a steady but slow increase in demand along with renewed commercial developer confidence.”
The only new development in Parramatta is Eclipse Tower, at 60 Station Street. It is almost fully pre-committed with tenants including Deloitte, QBE Insurance and Landcom.
The NSW economy continues to impact on Parramatta’s office sector with absorption still well below long term averages.
The market has office space totalling 684,400sqm and despite the soft level of demand, a lack of new construction or additions has put downward pressure on the vacancy rate, which has crept down from a high of 10.8% in 2010 to 8.7% as at July 2012.
Most leasing activity has been in the lower grades – C and D -with little activity in better quality buildings. Mr James said the outlook for the office market was tied to the health of the NSW economy, which had shown signs of improvement for 2013.
“This combined with the existing demand for A-grade space and lack of significant new supply for 2013 will likely be reflected in increasing leasing activity and upwardpressure on rents during 2013/14,” he said.
“The good news is that as Sydney continues to expand geographically and an increasing number of infrastructure projects are activated, Parramatta is well-placed to consolidate its position as the second largest employment centre outside of the Sydney CBD.”
Property Council NSW Executive Director Glenn Byres said some marginal shifts did little to change the fundamental story surrounding the office market in Parramatta.
“A combination of extra demand and some stock withdrawal drove the change, with net absorption of 2,726sqm over the past six months,” he said.
Net face rents are currently in the range of $420/sqm to $490/sqm for the newest A-grade properties, $330/sqm to $400/sqm for other A-grade properties and $250/sqm to $350/sqm for other secondary properties.
More information on Parramatta’s commercial property market is available at: http://parramatta.ljhcommercial.com.au/
