“The two-speed economy is ever-present even in the Parramatta market with approximately 9000sqm office space having been leased recently, the smallest of which was 1,500sqm, while the 200sqm to 1,000sqm office market remains soft,” Alan James, from LJH Commercial in Parramatta, said.
Aggregate demand has been solid for the past two and a half years, with weak consumer and business confidence, renewed pessimism about the impact of the European financial crisis, a jittery US economy and slowing growth in China failing to derail the upswing.
“The growth in western Sydney’s population will translate into a steady growth in employment over the coming decade,” James said.
“This will drive the construction in suburban markets such as Parramatta, North Ryde and St Leonards.
“The determining factors for forthcoming construction are site availability, amenities and good infrastructure. This is driven further by the demand for greener buildings. “
Nonetheless, there are signs that demand is slowing. In the absence of profit growth, cost-cutting is the overriding business rationale. Tenants are re-evaluating their prospects in an economy that shows few signs of strength, with even the resources sector now affected.
Meanwhile, the latest round of construction is coming to an end, with commencements of new projects having slowed or come to a halt.
The upshot is the national office vacancy rate at June 2012 was down by more than 1% from a year earlier, ranging from 4.2% in the Perth CBD to around 10% in Canberra.
“Demand from overseas and investment funds remains strong for A grade properties demonstrated with the sale of Eclipse Tower in Parramatta for $167.5 million to REST Industry Super,” James said.
“Indeed, net absorption strengthened through the first half of 2012, although Perth accounted for nearly half of the total, with Sydney and Melbourne making up much of the remainder.”
For further information regarding the commercial property market in Sydney’s western suburbs, contact LJH Commercial on (02) 9687 5588
