- Parramatta recorded 68,000sqm of positive net absorption during Q421
- Reflects strong pre-commitment, says JLL Research
- Over 250,000sqm of office space entered the market during the five years to 2021
With record levels of tenant activity in 2021, Parramatta continues to lead office market activity in New South Wales.
During the fourth quarter of 2021, Parramatta recorded strong positive net absorption of 68,000sqm – the strongest quarterly demand result JLL Research has witnessed since it began tracking the market in 1990.
The high levels of net absorption are due to a range of factors such as strong pre-commitment levels within new completions and high levels of activity within the small tenant market.
Subsequently, the headline vacancy rate in the Parramatta office market decreased by 0.8% to 12.1% over this quarter. The prime grade vacancy rate saw a significant decline from 21.8% during the second quarter of 2021 to 14% during the fourth quarter.
JLL itself brokered 28 leasing transactions in 2021, with the Western Sydney market accounting for 30% of all its NSW office leasing deals.
Milestone this year
Stephen Panagiotopoulos noted that the Parramatta office market will reach one million square metres of total office stock – the first decentralised Australian office market to achieve this.
“As an economic powerhouse, more businesses and people are gravitating from both suburban areas and Sydney CBD alike to the important employment and innovation hub,” said Mr Panagiotopoulos.
“There has been immense growth in the number of private sector businesses taking up space in Parramatta, driven by the recent multi-billion-dollar infrastructure and amenity boom. The top industries being the Federal Government, financial services, insurance, and SMEs.
“With projects such as Parramatta Square, Powerhouse Museum, Metro West and Light Rail lines all under construction, these projects have drawn large scale businesses across infrastructure, engineering, and development to the precinct, with smaller businesses following in their footsteps.”
Stephen Panagiotopoulos, JLL
During the five years to 2021, over 250,000sqm of office space entered the market, reflecting a growth rate of 38%. This is the strongest five-year growth rate of 19 office markets tracked by JLL.
“As a result of the completion of major new developments in 2021 that were pre-committed some time ago, thousands of new employees are returning to work in brand-new high-quality offices,” added JLL’s Office Leasing Parramatta senior director, Ben Lalic.
Mr Lalic noted that the office market, however, is nearing the end of if its development cycle witch just two assets under construction – 8 Parramatta Square and 85 Macquarie Street, offering a combined leasing area of 60,000sqm.
“It is expected that the best quality office space will continue to attract the most leasing interest in the market,” he added.
“With such high current net absorption levels, businesses need to look to secure space in the next 10 months or will have to wait two or three years for future quality stock to come online, otherwise take up existing older refurbished A-Grade stock.”
Into the future, both Mr Panagiotopoulos added recently completed stock continues to attract a broad range of industries such as the public sector along with professional services such as finance.
“The best is yet to come for the global city. Western Sydney more broadly is amid an economic and cultural boom, with unprecedented levels of private and public sector investment,” said Mr Lalic.
“As the metropolitan centre of Government NSW’s A Metropolis of Three Cities, the plan will continue enhancing Parramatta’s economy by continuing to pursue finance, administration and business services and while strengthening the world-class health, education, and research institutions in the CBD.”
