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Murmurs in the west

Murmurs in the west
Sydney Morning Herald, Page: 90
By Philip Hopkins
Saturday, 26 November 2011
Ref: 124268941

THE completion of a sizeable building in Parramatta next year is likely to be the forerunner to more development in the city because of strong tenant demand and consistent positive net absorption.

In its latest Sydney Metropolitan Market ViewReport, GB Richard Ellis says about 75,000 square metres of office stock could be built in Parramatta in the next five years. The report covers the central business district, north shore, Macquarie Park and Parramatta markets and other suburban office locations.

The 25,000-square-metre Eclipse project at 60 Station Street, Parramatta, will be completed in the third quarter of next year.

The CBRE review says it is likely to be followed by more than 20,000 square metres at 105 Phillip Street and 25,000 square metres in stage one of Civic Place.

The associate director of office services for CBRE, Stephen Panagiotopoulos, said Eclipse had pre-commitments of 85 per cent.

New projects after this would bolster Parramatta in the short-tomedium term against competition from Macquarie Park and Rhodes.

"Helping to drive new development projects will be the continued increase in Parramatta’s gross face rents, coupled with low vacancy levels for grade-A and B property classes," he said.

A research and consulting analyst for CBRE,AlexBedrossian, said tenant demand and a lack of new supply had generated stable rental growth in the Parramatta office market in the past 12 months.

"CBRE is forecasting that grade-A rents will grow by an average rate of 3.4 per cent per annum between 2011 and 2015," he said.

During the past three quarters, gross face indicative rents for A-grade properties rose by 2.8 per cent to reach $450 a square metre, while B-grade assets increased by 3.5 per cent to $378 a square metre in the same period.

"Given the amount of new supply likely to enter the market over the next five years, tenant demand is forecast to remain positive," MrBedrossian said.

The report says 16,721 square metres of office space would be taken up by the end of this year, more than tripling the amount of net absorption from 2010.

Mr Bedrossian said the lack of new office stock in the past five years had helped keep vacancy rates low.

"Over the first half of the year, total vacancy for the Parramatta office market declined by 30 basis points to reach 9.3 per cent," he said. "Vacancy is forecast to average 7.3 per cent overall between 2011 and 2015, with a peak in 2014 to correspond with the completion of new developments, before falling again in 2015."

Caption Text:
On the move... Parramatta is set for more developments. Photo: Domino Postiglionn

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