Walker Corporation's Parramatta Square development.

Parramatta office market bucks the global pandemic

Carolyn Cummins|Mar 22, 2021

Parramatta in Sydney’s west has long-defied the volatile national office market and remains the tightest-held of all the major centres despite the impact of the global pandemic that forced workers to stay at home.

Although there are close to $6 billion worth of developments coming out of the ground, most of the skyscrapers are pre-leased which has kept a lid on vacancy rates.

Walker Corp, GPT, Charter Hall and Dexus have all ear-marked the area for developments. The precinct will also be a major beneficiary of the new Sydney airport at Badgerys Creek.

Lang Walker’s Walker Corporation has one of the biggest projects and is working on the final two commercial towers in the $3.2 billion Parramatta Square project.

In the latest Property Council Office Market Report to the end of January, the vacancy rate rose from 4.8 per cent to 6.4 per cent, although the rate of leasing, as measured by net absorption, increased to 28,673 square metres.

“For all that is going on in the world, Parramatta is still in a strong position,” the Property Council of Australia’s Western Sydney regional director Ross Grove said.

“Parramatta now has more office space leased than it had pre-COVID, and we have more people taking up office space than leaving.

Ray White Commercial head of research Vanessa Rader, said the Parramatta CBD continues to be one of the better performing office markets across Australia, with the impacts of COVID-19 somewhat limited with few major movements due to the pandemic.

Office users, however, are considering their accommodation options with many businesses rationalising space or looking for cost savings, while taking advantage of the incentives on offer.

“Backfill is a growing issue across this market, with completions over the last year and into 2021 resulting in tenant relocation and consolidation resulting in available backfill spaces including various government departments, Commonwealth Bank and Telstra,” Ms Rader said.

“This trend will hamper vacancy and keep absorption levels subdued in the first half of 2021, forecast at -15,584sq m.

“The Parramatta CBD enjoyed strong levels of rental growth over the past five years due to the low vacancy environment,” Ray White Commercial Western Sydney leasing director Alan James, said.

“Strong demand also assisted the secondary market as the gap between prime and secondary assets narrowed due to these limited stock options.”

On the investment site, Ray White Commercial Western Sydney director Joseph Assaf, said the surge in investor interest was high before the onset of COVID-19 with volumes in 2019 exceeding $900 million.