2022-04-08-莱坊-Parramatta_Office_Market_March_2022_6页_4mb

Parramatta Office Market Summary (March 2022)

Core Content

Parramatta's office market is undergoing significant transformation due to unprecedented private and public sector investment, positioning it as an emerging CBD center in Sydney. The market has experienced a notable increase in office stock, with a 9.6% growth over the last 12 months, and prime office stock now accounts for over half of the total stock base for the first time on record.

Key Insights

• Market Growth: Parramatta is on track to become the second-largest CBD in New South Wales by office stock size, surpassing the Sydney CBD.
• Vacancy Rate: The market's vacancy rate reached a 20-year high of 13.4% in January 2022, driven by a record 99,722 sqm of new supply in a single six-month period.
• Prime Market: Prime vacancy increased to 17.6%, up from 3.4% in January 2021, offering new opportunities for tenants seeking upgrades or new space.
• Yield Stability: Prime yields have held firm between 5.00% and 5.75%, while secondary yields range from 6.00% to 6.50%.
• Rental Trends: Net effective rents for prime assets have decreased by 2.6%, and for secondary assets by 5.6%, due to incentives that have remained above average.
• Infrastructure Development: Stage 1 of the Parramatta light rail project is underway and expected to open in 2023, with preparations for the Sydney Metro West project also beginning.

New Development Reshaping Parramatta

Several major developments are currently under construction or completed, contributing to the market's growth and diversity:

• Parramatta Square (PSQ6): Completed in late 2021, adding 71,000 sqm of prime office space, with over 60% commitment.
• PSQ8: Due for completion in early 2022, adding 53,000 sqm of prime space, with a commitment rate of 60%.
• 6 Hassall Street: Completed in H2 2021, with over 50% commitment, anchored by UNSW and WSU.
• 85 Macquarie Street: Under construction, expected to be completed by the end of 2022, anchored by Commonwealth Bank of Australia.

These developments have been instrumental in increasing the supply of prime office space and attracting major tenants such as Westpac, Deloitte, and Link Market Services.

Resilient Capital Values

• Face Rents: Average prime net face rents have remained stable since January 2020 at $588/sqm, with secondary markets at $476/sqm.
• Incentives: Prime incentives are at 27%, while secondary incentives have risen to 30%, impacting net effective rents.
• Investment Activity: In 2021, investment volumes reached $284.5 million, driven by domestic capital. Notable transactions include:
  • 140 & 150 George Street: Sold for $154.5 million by Dexus/CPPI to Mintus.
  • 32 Phillip Street: Acquired by LC Partners for $66 million on a 5.34% yield.
  • 9 Wentworth Street: Sold by Mayrin Group to Parramatta Council for $64 million at a 5.07% yield.

Competitive Yield Pricing

• Yield Arbitrage: A 105bps positive prime yield spread exists between Parramatta and Sydney CBD, making it an attractive investment destination.
• Market Trends: Institutional ownership is increasing, and new quality stock combined with improved infrastructure is reinforcing Parramatta's appeal to both local and offshore investors.

Recent Tenant Commitments

Several major tenants have committed to new or upgraded spaces in Parramatta:

• CBHS Health: Upgrading from 79 George Street to 6 Hassall Street.
• Pepper Money: Occupying 1,534 sqm at 6 Hassall Street.
• Department of Home Affairs: Occupying 13,974 sqm at 101 George Street.
• Centre of Mathematics: Occupying 533 sqm at 2 Wentworth Street.
• Workspace365: Occupying 1,320 sqm at 60 Station Street.
• Spry Roughey & Co: Occupying 550 sqm at 3 Horwood Place.
• Arab Bank: Occupying 484 sqm at 20 Smith Street.
• Techwave: Occupying 300 sqm at 80 George Street.
• Lendlease: Occupying 1,297 sqm at 25 Smith Street.

Summary of Market Indicators (January 2022)

Conclusion

Parramatta's office market is evolving rapidly, with new developments, increased supply, and a rise in vacancy rates creating both challenges and opportunities for tenants and investors. The market's resilience, competitive yields, and strategic infrastructure projects make it an attractive location for investment and business expansion. The availability of prime space and the flight to quality trend are expected to continue, influencing future market dynamics.