Over the coming editions Property Hot Spots will take a close look at the drivers, opportunities, people and places that shape Western Sydney’s property market with a particular focus on the commercial and industrial sectors.
Property Hot Spots will become the go-to section for anyone serious about gaining insights into the property plays in one of Australia’s most dynamic regions – Western Sydney.
With more than 370 offices throughout the world Knight Frank is a global powerhouse that focuses on all the prime residential and commercial property markets of the world.
Such extensive reach means Knight Frank is perfectly positioned to access the very best market intelligence.
For the first edition of Property Hot Spots, I sat down with Knight Frank West Sydney Managing Director David Morris and the Director Commercial and Leasing West Sydney, Wally Scales to ask them some questions around the Parramatta commercial market.
Q: There seems to be an oversupply of apartments in the greater Sydney market. Will this situation affect Parramatta to the same extent?
A: Unlikely. Parramatta provides a more compelling work, rest and play environment than most of the locations where significant high density development is occurring throughout suburban Sydney. Additionally, the residential rates for equivalent product is competitively priced compared in inner ring locations closer to the Sydney CBD. The combination of access, amenity, jobs and affordable price in Sydney’s second CBD will drive for demand for the next decade and enable Parramatta to withstand a market correct more effectively than other Sydney hot spots.
Q: Will the supply of commercial space in Parramatta meet the predicted employment growth in the region, bearing in mind that it will be a while before suitable office space is delivered in the other key growth centres such as Camellia and Rydalmere?
A: The Parramatta CBD workforce is forecast to increase by 50%, from 50,000 to 75,000 by 2035. This increase of 25,000 workers will require about 250,000 sqm of new commercial space over the 20 year period. Once potential office withdrawals for proposed high rise residential development around the perimeter of the commercial core are taken into account we estimate that a new 25,000sm office building will need to be delivered about every two years or so over the next two decades to accommodate this growth. Parramatta Square can only account about one third of the take-up requirement, so numerous other major commercial development projects will be required. Fortunately there are various sites throughout the CBD that can be redeveloped for this purpose in the medium term and all the critical infrastructure is already in place so Parramatta is well positioned to facilitate this scale of commercial development activity over the next 20 years.
Q: Why should major corporations consider Parramatta as an alternative location to the Sydney CBD or Macquarie Park?
A: Access, amenity and competitive pricing in a strategically central location that is closer to where the bulk of the workforce live makes Parramatta a logical location for corporates seeking cost effective alternatives to the Sydney CBD. New supply of high quality, efficient buildings will provide corporate business with the choice and standard of office premises that have been lacking here in the past and generally only been available in suburban business parks. Being easier to get to with much more to do when you get there also makes Parramatta a much more appealing location for employees, which is an increasingly important consideration for corporate staff recruitment and retention.
Q: Which of the light rail routes does KF think will be most beneficial to the western Sydney region, and why?
A: The Sydney Olympic Park route has the potential to stimulate greater development activity in the medium term to accommodate Sydney’s population growth than the other routes. However, for the Western Sydney light rail network to be fully deployed it is vital that first route is well patronised to justify further extensions and the Macquarie Park option is better positioned to deliver this initial success. Hopefully, the value sharing proposition that allows private funding to contribute to the cost of the Sydney Olympic Park route will enable the government to commit to both these routes in the initial deployment. The positive impact that both routes will subsequently have on Western Sydney will then facilitate the further extension of the network to the two remaining options of Castle hill and Bankstown at a later date.
