Parramatta Blog

The Parramatta CBD commercial market is undergoing significant changes. This is due to a variety of factors, including unprecedented private and public investment, which is solidifying the city's status as an expanding CBD with an active landscape. Parramatta will become the second largest CBD in NSW by next year, thanks to ongoing developments such as the Parramatta Light Rail Project, which is set to open in 2023, and Walker Corporation's Parramatta Square, which has already added over 200,000 sqm of prime office space over the last three years. 

Another thing to consider is the significant growth in office stock size which has resulted in Parramatta experiencing its highest vacancy rate in two decades, at 13.4%, giving an opportunity for fresh market aspirants after an extended period of limited selection. Prospective tenants now have a reasonable choice of options for upgrading their properties that were previously unavailable. This in turn is creating a very competitive market for the sub B grade stock where owners are suffering longer vacancy periods and are having to face offering increased incentives than previous. 

As a result of the foregoing, average net rentals have remained steady from January 2020, at $588 per square metre ($707/sqm gross rentals) in January 2022. Incentives are still above average for Premium/A grade stock, similar to rival markets, as owners seek to recruit and keep tenants. Average incentives were 27% in January 2022, lowering net effective rentals to $429/sqm, a 2.6% decrease over the previous year.

In the future, Parramatta's position as a desirable investment location for both local and offshore investors will be bolstered by increased institutional owners mainly chasing additional high-quality stock, being located around enhanced infrastructure. Prime yields have stayed stable over the last year, averaging 5.45% in January 2022, with top-end prime assets anticipated to attain sharper metrics closer to 5%. In 2022, this trend is predicted to continue, with yields likely to be stable in the short term as overseas investors will counter any economic slowdown in our opinion.

*Written by Jayden Ayoub | Commercial Sales & Leasing