Why Parramatta’s office tenants are ‘fleeing older stock’

JLL is tracking 15,400 square metres of office stock under construction across two projects in Parramatta. The largest, 85 Macquarie Street at 10,000 square metres, is due for completion this year.

Ben Lalic, JLL’s senior director of office leasing in Parramatta, said existing tenants looking at the flight to quality “need to move now”.

“Lots of new development has come online in the past few years, but there’s no more space being added to market,” Lalic said.

“We’re seeing a limited time for occupiers to take advantage of the flight to quality; the window is 12 months. Prime grade space is non-existent, and occupiers will have to settle in the secondary grade market.”

There were two key office transactions during first half of 2023, totalling $67.6 million. They were 9 George Street, sold by the Brisbane Investment Corporation to a private investor for $49.6 million, and 144 Marsden Street, sold by a private investor to the Unity Church of Australia for $18 million

Vanessa Rader, head of research at Ray White said while the absorption of space for Sydney’s markets, such as the CBD and Parramatta, has not had the volume to move the vacancy rate downwards, “it is clear new tenants are fleeing older style stock for shiny Premium and A-grade offerings.”

“Supply of these assets in these markets too have played a role. Continued new supply of high-grade assets is not allowing these markets to reset after the COVID-19 disruption,” Rader said.

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