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News release

Sydney

Investment confidence spurs leasing activity in Parramatta

Stronger yields achieved in Q414 sales transactions may encourage construction in Parramatta’s tightly-held office leasing market this year


​​​SYDNEY, 4 FEBRUARY 2015 – Parramatta’s office leasing market remains tightly held, with a low vacancy rate throughout 2014 continuing into this year. However, according to agents, yields achieved from Q414 sales transactions are setting new benchmarks for the area, which could encourage construction in 2015.

JLL’s Director of Leasing for Parramatta, William Tong, said the tight supply of office stock available for lease in Parramatta meant that limited leasing transactions were recorded for 2014.

“The education sector dominated demand in 2014, with a number of transactions completed by tertiary education providers including the University of Western Sydney, Empower College and Raffles Design College. Financial and professional services were also active in taking up further A-grade space in the CBD core.” 

However, according to Mr Tong, stronger yields seen on the latest Parramatta transactions are setting new benchmark prices for the area, which could have a positive impact on Parramatta’s leasing market this year by spurring on construction.

“New developments would mean availability of additional office space in Parramatta. It’s not a question of whether that space would be taken up – there is a lot of pent-up demand for the area. It’s more a question of when new office stock will become available.”

Recent sales transactions in Parramatta include 87 Marsden Street, which sold for $33m and achieved a yield of approximately 8%; Charter Hall’s purchase of Parramatta Square Stage 1 – pre-committed by the University of Western Sydney - which sold for $220.5m; and the sale of the Parramatta Justice Precinct for $170.1m with a yield of sub-6.5%.

“These sharper yields have set  new benchmark prices for the Parramatta area and may help developers and tenants to align with their goals as construction becomes more attractive and business confidence increases,” said Mr Tong.

Office leasing market highlights in Parramatta during the final quarter of 2014 included NSW Police who leased 960 sqm at 2 Wentworth Street, and KPMG who leased 940 sqm at 91 Phillip Street. 

“We don’t expect much activity from the education sector in Q1 2015 as most are now in preparation for a new semester. 

However, we expect a good level of activity from professional and financial services, such as mortgage brokers and recruitment firms, in the sub-500sqm range,” concluded Mr Tong.