The Sydney office market can be characterised as a “planet” with the Sydney CBD at the centre and with satellite precincts at varying distances around it. Within the Sydney office market, Jones Lang LaSalle monitors ten precincts. Parramatta currently is the fourth largest by total stock (716,000 sqm) behind Sydney CBD (4.9 million sqm), Sydney Fringe (926,000 sqm) and North Sydney (848,000 sqm). The Parramatta office precinct is located 24 kilometres west of the Sydney CBD and is the geographical centre of Sydney from a population location perspective. Although Parramatta is some distance from the Sydney CBD, Parramatta has many of the amenities of CBD locations, with significant population driving employment, major retail outlets and public transport servicing the area.
Since 2000 the New South Wales Government has decentralised a majority of its departments to Western Sydney, with Parramatta CBD the prime location to service the Western Sydney area. Government Administration and Defence Industry categories make up 49% of total take up followed by Finance and Insurance companies who make up 25% of total take up since 2008.
With the projected increase in population and workforce in the Western Sydney region there are currently congestion issues within the Parramatta CBD, where eight strategic roads converge. To address these problems there are currently two infrastructure projects under consideration: the Western Sydney Regional Ring Road and Western Sydney Light Rail Network to connect to nearby suburbs where the current heavy rail network does not service.
Parramatta Council is a significant player in the future development pipeline as it owns large tracts of land in the central CBD area suitable for development. The council intends to develop a mix of residential, public and commercial spaces in the next 5 to 10 years. Currently there are no significant developments (≥ 5,000 sqm) under construction, however, 134,100 sqm of commercial space is planned to be developed in the next 5-10 years including Parramatta Square.
Parramatta has an overall vacancy rate of 8.4%, however this market has the lowest A-Grade vacancy rate of all monitored markets in Australia at 1.8%. As a result Parramatta is currently unable to attract tenants seeking desirable A-Grade office with large enough floor plates to accommodate their needs.
Across the Sydney markets, Parramatta has the fourth lowest average prime effective rents (AUD 306 per sqm p.a.). However there is competition from comparable suburban office markets (Macquarie Park, Homebush/Rhodes, South Sydney) with closer proximity to the Sydney CBD and with available vacancy with floor plate sizes that prospective tenants desire. Therefore the combination of available green space with large efficient floor plates, lower effective rents and proximity to the CBD may lead tenants to choose other suburban precincts to meet their space needs. Future development depends in part upon infrastructure investment to turn Parramatta’s location at the geographical centre of Sydney into a positive for employment growth. In the next few decades, with significant development of modern office space and imaginative planning, Parramatta has the potential to become Sydney’s second CBD market.
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- Sydney CBD office: flood of supply, then droughtOctober 31, 2023
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