SYDNEY, 14 March 2022 – Parramatta continues to lead office market activity in NSW as the area continues to cement itself as a global city, with record levels of tenant activity in 2021.
In 4Q21, the Parramatta office market recorded robust leasing activity with strong positive net absorption of 68,000 sqm. This was the strongest quarterly demand result since JLL Research began tracking the market in 1990.
The high net absorption levels are largely a combination of strong pre-commitment levels within new completions as well as strong activity within the small tenant market. As a result, the headline vacancy rate in the Parramatta office market fell to 0.8 pps to 12.1% over 4Q21 and has supported the prime grade vacancy rate trending down from a peak of 21.8% in 2Q21 to 14.0% in 4Q21.
The Parramatta office market had increased activity in 2021 compared to 2020, with JLL brokering 28 leasing transactions for the market in 2021. The Western Sydney market accounted for 30% of all NSW office leasing deals completed by JLL in 2021.
JLL’s Office Leasing Parramatta Senior Director, Stephen Panagiotopoulos said, “Parramatta will hit a significant milestone this year, reaching one million sqm of total office stock. This will be the first decentralized office market in Australia to reach this milestone. As an economic powerhouse, more businesses and people are gravitating from both suburban areas and Sydney CBD alike to the important employment and innovation hub.
“There has been immense growth in the number of private sector businesses taking up space in Parramatta, driven by the recent multi-billion-dollar infrastructure and amenity boom. The top industries being the Federal Government, financial services, insurance, and SMEs.
“With projects such as Parramatta Square, Powerhouse Museum, Metro West and Light Rail lines all under construction, these projects have drawn large scale businesses across infrastructure, engineering, and development to the precinct, with smaller businesses following in their footsteps,” said Mr Panagiotopoulos.
Just over 250,000sqm of office space has completed in the market over the five years to 2021, which is reflective of 38% growth. This is the strongest growth rate over a five-year period when compared to the 19 office markets tracked by JLL Research.
JLL’s Office Leasing Parramatta Senior Director, Ben Lalic said, “As a result of the completion of major new developments in 2021 that were pre-committed some time ago, thousands of new employees are returning to work in brand-new high-quality offices.
“We are nearing the end of the current development cycle, with only two assets under construction totaling 60,000 sqm of stock. It is expected that the best quality office space will continue to attract the most leasing interest in the market. With such high current net absorption levels, businesses need to look to secure space in the next 10 months or will have to wait two or three years for future quality stock to come online, otherwise take up existing older refurbished A-Grade stock,” said Mr Lalic.
The next completion in the Parramatta office market will be 8 Parramatta Square (50,000 sqm) and is one of three major commercial assets within the AUD 2.7 billion ‘Parramatta Square’. The development has an expected completion date in 2Q22 and has received a 20,000 sqm pre-commitment from Westpac, as well as Link Market Services.
The second project under construction is 85 Macquarie Street (10,000 sqm), which is due for completion in 3Q22. The Commonwealth Bank of Australia has pre-committed to two floors (2,000 sqm) in the building.
Mr Panagiotopoulos said, “Parramatta net absorption is forecast to be positive in 2022 although it will moderate from the high of 2021. Recently completed prime office stock will continue to lease well as it is attracting interest from a broad range of industry sectors such as the public sector , as well as finance and professional services.”
JLL negotiated the deal for the Department of Home Affairs at 101 George Street, consolidating three existing Home Affairs office buildings in Parramatta and Sydney’s CBD into one Parramatta site. The A-Grade office tower has nine floors and a 5.5-star NABERS energy rating, with ground floor retail and 290 car parking spaces.
JLL brokered the deals for two whole floors of premium office space at 60 Station Street, Parramatta. Totaling 2,646sqm (1,323sqm each), Level 4 of Eclipse Tower was leased to Complete Credit Solutions and Level 15 to Workspace365. Eclipse Tower is a landmark A-Grade commercial tower sitting at the geographical center of Sydney.
At the start of 2022, JLL relocated its Western Sydney office to prime-grade office space in Parramatta at the recently completed 32 Smith development. Owned, developed and operated by The GPT Group, JLL occupies 1,000 square meters of space on level 12, nearly doubling the size of its footprint in Western Sydney.
Mr Lalic said, “The best is yet to come for the global city. Western Sydney more broadly is amid an economic and cultural boom, with unprecedented levels of private and public sector investment. As the metropolitan center of Government NSW’s A Metropolis of Three Citiesthe plan will continue enhancing Parramatta’s economy by continuing to pursue finance, administration and business services and while strengthening the world-class health, education, and research institutions in the CBD.”