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• Parramatta has a prime vacancy of just 2.2% in Q1/2012 which is the lowest of all prime office markets in Sydney and one of the lowest in Australia.• To meet demand from major tenants, landlords are refurbishing secondary assets.
SYDNEY, 11 April 2012 – Landlords in Parramatta’s tightly held office market are refurbishing secondary assets to meet demand from major tenants looking to lease space in the area, regarded by many as the ‘second CBD’ of Sydney.
While the total vacancy rate in Parramatta in Q1/2012 was 8.6%, the prime vacancy rate was just 2.2% leading to the development of a two-tier market.
According to William Tong, Director of Office Leasing at Jones Lang LaSalle, Parramatta’s increasing popularity with corporates is driving demand for prime office space.
Mr Tong said, “Parramatta is becoming increasing popular for corporates attracted by the relatively inexpensive rents, solid infrastructure and proximity to public transport.”
“Due to the limited supply of prime stock in Parramatta many tenants are unable to secure space in A-grade developments. As a result, owners of secondary buildings are undertaking extensive refurbishments to meet the demand.”
20 Charles Street, a C-grade building in Parramatta’s CBD was purchased by a private investor in 2010 and was extensively refurbished in 2011 to a B+ grade standard. The property now has a new Building Management System (BMS), extended lobby, upgraded air-conditioning, refurbished lifts, new ceilings, new T5 lighting and an upgraded shop front. The owner of 20 Charles Street undertook the refurbishment with the aim of creating a green building.
Prior to the refurbishment, the building had a 70% vacancy rate but is now fully leased. Major tenants in the building include NSW Police which occupy 3000 sqm.
100 George Street, which currently has approximately 3,000 sqm of available space, is undergoing refurbishment which is expected to be completed next month. The renovation will provide tenants with a new forecourt, lobby and building façade amongst other improvements.
Mr Tong expects that the refurbishment of 100 George Street will generate a similarly high level of interest as 20 Charles Street.
“20 Charles Street is a great example of how big a difference a refurbishment can make to tenant demand for a particular building. For a secondary asset to go from having a 70 per cent vacancy to being fully leased in 12 months is quite remarkable.”
“I expect that 100 George Street will be a popular choice for tenants this year and that we will see a significant reduction in the available space in the building.”
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