2023-10-05-莱坊-Parramatta_Office_Market_September_2023_6页_2mb

Parramatta Office Market Summary (August 2023)

Core Content

Parramatta has experienced significant transformation in its office market over the past five years, driven by both private and public sector developments. This has solidified its position as a major CBD center in New South Wales, with a vibrant and culturally diverse landscape. The total office stock in Parramatta has grown by 37% to 980,835 sqm, making it the second-largest CBD in the state. Prime grade office space now constitutes 58% of the total stock, up from 47% two years prior.

Key Insights

• Market Transformation: The office market has seen substantial growth, with the addition of over 320,000 sqm of prime office space through Walker Corporation's Parramatta Square development.
• Infrastructure Investment: Stage 1 of the Parramatta light rail project is expected to open by the end of 2023, while the $26 billion Sydney Metro West project is underway with completion anticipated around 2030.
• Build to Rent Growth: The build to rent sector is expanding, contributing to the housing supply and local economy.
• Luxury Hotel Development: InterContinental is set to open its first hotel in Greater Western Sydney, located in the heart of Parramatta CBD by the end of 2025.

Vacancy and Net Absorption

• Overall Vacancy Rate: 23.4% as of July 2023.
• Prime Grade Vacancy: 19.4%, up from 18.0% due to the return of 150 George Street to the market after a major refurbishment.
• Secondary Grade Vacancy: 29.0%, up from 18.3% in January 2023.
• Net Absorption:
  • Prime: +25,615 sqm (positive net absorption of 9,739 sqm in the six months to July 2023).
  • Secondary: -47,653 sqm (negative absorption of 143,810 sqm since January 2020).
  • Total: -22,038 sqm.

Rental Performance

• Prime Net Face Rent: $586/sqm (down 2.3% YoY).
• Secondary Net Face Rent: $492/sqm.
• Incentives:
  • Prime: 35.7% (up from 32.5%).
  • Secondary: 38.1%.
• Net Effective Rent:
  • Prime: $377/sqm (down 10% YoY).
  • Secondary: $250/sqm (down 12% YoY).

Investment Activity

• Constrained Transactions: The market has been thinly traded, with only one major transaction settled in the first half of 2023: 144 Marsden Street, acquired by The Uniting Church in Australia Property Trust (NSW) for $18 million on a core market yield of 5.44%.
• Yields Softening:
  • Prime: 6.63% (down 74 bps in 6 months).
  • Secondary: 7.17%.
• Capital Depreciation: Both prime and secondary office buildings have seen capital value depreciation due to yield expansion and weak rental performance.

Recent Significant Sales

*Fully Leased yield ^Exchanged in December 2023 with Settlement February 2023

Recent Significant Tenant Commitments

Contact Information

• Research:

  • Marco Mascitelli: +61290366656 | Marco.Mascitelli@au.knightfrank.com
  • Ben Burston: +61290366756 | Ben.Burston@au.knightfrank.com
  • Naki Dai: +61290366673 | Naki.Dai@au.knightfrank.com

• Capital Markets:

  • Ben Schubert: +61290366870 | Ben.Schubert@au.knightfrank.com
  • Graeme Russell: +61290366618 | Graeme.Russell@au.knightfrank.com
  • Wally Scales: +61 2 9761 1813 | Wally.Scales@au.knightfrank.com

• Valuations & Advisory:

  • Tim Barwick: +6129028 1101 | Tim.Barwick@au.knightfrank.com

• Office Leasing:

  • Al Dunlop: +61290366765 | Al.Dunlop@au.knightfrank.com
  • Spero Xenos: +61 2 9761 1851 | Spero.Xenos@au.knightfrank.com

Knight Frank Research Reports are available at knightfrank.com/research. The reports provide strategic advice, consultancy services, and forecasting to a wide range of clients, including developers, investors, funding organizations, corporate institutions, and the public sector.