This article is from the Australian Property Journal archive
Demand for office space in the Parramatta CBD has driven vacancy levels down to 8.8%, according to the Property Council of Australia?s latest Office Market Report.
Office vacancy levels fell 2.0% to 8.8% in the six months to January 2007.
Demand for office space was 11,329 sqm over the past six months, Parramatta’s second consecutive period of positive net absorption. In total, business tenants filled an additional 13,981 sqm in office space from January 2006 – roughly the equivalent to Parramatta’s ‘The Barrington’ at 10 Smith Street.
Since July 2006, 10,725 sqm of new office space has been added to Parramatta’s CBD, substantially less than the 23,166 sqm of space added in the first half of 2006, and less than the 11,394 sqm of space withdrawn from the market.
Property Council’s New South Wales president Mark Gray welcomed the improvement in Parramatta’s market.
“A remarkable amount of office space has been occupied in Parramatta over the past six months. This shows a welcome turnaround in the market, which has experienced a flood of supply in recent years.
“Parramatta is experiencing a similar phenomenon to other office markets across Australia, with tenants shuffling out of old buildings into new, higher quality offices,” Gray said.
“However, unlike other Sydney markets, Parramatta has higher vacancy rates for higher grade office stock, with D Grade stock recording a low 5.0% vacancy rate compared to 8.5% for A Grade stock,”
In 2007, 67,560 sqm of new space is due to enter the Parramatta market. Of this, 78% has pre-committed tenants. A further 30,300 sqm of space is forecast to come onto the market from 2009 onwards.
Meanwhile, the North Shore market is basking in demand for quality office space.
Ongoing demand from business for quality office space has kept the office vacancy rate low for the North Shore, according to the OMR. But expected stock additions might outstrip demand in the future.
Office vacancy levels dropped marginally to 9.9%, a fall of 0.1% over the last six months.
Demand for office space was 18,734 sqm over the past six months, more than three times the 15-year average for this market. In total, business tenants have filled an additional 35,006 sqm in office space since January 2006 – the equivalent of the Optus Centre at 101-103 Miller Street.
Since July 2006, 28,985 sqm of new office space has been added to the North Shore, more than two-and-a-half times greater than the 10,746 sqm of space withdrawn from the market.
Gray said the research showed that demand for quality office space was driving the North Shore office market.
“Strong demand for A Grade office space has kept the vacancy rate low at 8.7%, compared to other Grades which have vacancy rates in excess of 10%.
“Across the North Shore, Chatswood is lagging behind other markets with a vacancy rate of 13%, compared to 8.1% for North Sydney and 11.1% for Crows Nest / St Leonards,” Gray said.
Finally the solid demand continues for North Ryde office space.
Following years of strong growth and rapid expansion, the North Ryde office market has posted a marginal increase in its vacancy rate, according to the OMR.
Office vacancy levels rose marginally to 9.2%, an increase of 0.2% in the last six months. However, compared to one year ago, the office vacancy rate is still down 0.6%.
The popularity of North Ryde has seen office vacancy rates drop from a high of 14.4% at the beginning of 2005, to remain below 10% despite an influx of space over the past two years. Business tenants have filled 19,104 sqm of office space since January 2006.
After a year of strong demand, North Ryde experienced negative net absorption of 714 sqm in the last six months. No new office space was added in North Ryde in this period.
Australian Property Journal
