There has been a lot of talk about Parramatta in the press of late, and for a good reason.
The level of construction activity is in the billions, the offices are full, shop tills are ringing and industrial landlords are snapping up any land they can find.
It’s not having a day in the sun, more like the rest decade, if all the projections come true.
One of the latest projects is the $876 million South Quarter development by Dyldam, which includes a $225 million commercial hub, covering offices, retail and hospitality outlets over 39,000 square metres.
GPT Group is building a $230 million office tower, while Walker Corporation and Charter Hall are part of the revamp of the $6 billion Parramatta square development.
According to Savills’ research, getting a foothold in the office sector will be no mean feat with the private sector competing head-on with an expanding array of government offices all wanting space.
In the latest data from the Property Council of , vacancy for premium-grade office space is zero, while B-grade is filling up fast.
JLL’s director of leasing, Scott Butler, said Parramatta was undergoing “phenomenal regeneration”.
All this activity is leading to solid rental growth.
JLL Research is forecasting above-average prime gross effective rental growth over the next year, with prime grade vacancy zero, no prime-grade assets and only 10 secondary grade assets with more than 1000 sq m of space availability.
“Not only have we seen commercial values appreciate very strongly over the past three years in Parramatta, but the net increase in stock over the next three years will likely be the largest of any of Sydney’s commercial markets.”
Mr Butler said Parramatta is the geographic centre of metropolitan Sydney, and a key piece in the formulation of government infrastructure policy. This will include development of the Parramatta Light Rail, as well as early feasibility works under way for the Sydney Metro West.
However, Parramatta’s occupier profile is diverse. JLL’s head of research, , Andrew Ballantyne said Parramatta already had a strong representation of corporate , with seven of the top-20 ASX-listed companies in its CBD.
“Western Sydney is a population growth corridor of NSW and will record strong growth in the working age population. We believe that organisations are increasingly undertaking more sophisticated workforce population mapping exercises and will consider Parramatta as a strategic location to assist with the work-life balance of employees,” he said. Retail booming
Knight Frank’s senior research manager, NSW, Alex Pham said the Parramatta CBD was experiencing a massive development boom, with more than 21 DA-endorsed mixed-use developments in the pipeline. According to the City of Parramatta, projects could yield nearly 9200 extra dwellings and about 170,000 sq m more commercial floor space.
The retail vacancy rate in the Parramatta CBD retail core measured 2.8 per cent as at July 2017, marginally higher than that in the Sydney CBD at 2.6 per cent.
“Currently dominated by food outlets, we expect the tenant profile in Parramatta to change over the coming years as a larger variety of fashion, footwear and technology retailers take up space in the Parramatta Square development. With the Parramatta light rail linking surrounding suburbs, Parramatta will become a more attractive retail destination for western Sydney residents,” Mr Pham said.
“Food retailing was the most dominant retail category in Parramatta as at July 2017, accounting for 27 per cent of the total tenancy mix.”
Knight Frank research shows most food retailers were street-front takeaway shops, restaurants and cafes, which accounted for 82 per cent of the total number of food retailers in Parramatta. Clothing and footwear retailers had the second-largest presence in the city, representing 19 per cent of the total retail units. This is in contrast to the Sydney CBD’s retail tenancy mix, which has clothing and footwear as the most dominant retail category, 39 per cent, followed by food retailing at 18 per cent.