This article is from the Australian Property Journal archive
ORGANISATIONS looking to cut costs and decentralise their workforces are likely to find new homes in the Parramatta, North Sydney and Macquarie Park, where office space can be half the price.
JLL’s western Sydney senior leasing director, Ben Lalic said back of office markets do well in times of downturn because office space is cheaper and the economic case for job reductions in turn creates vacancy in the back of office market.
“In this current environment, it is logical for businesses to sublease or relinquish their CBD space and shift their workers into the ‘back of office’ precincts where rents for A grade buildings in Parramatta are approximately 50% less than A grade CBD stock,” he said.
March quarter vacancy in Parramatta was recorded 4.1%, according to JLL, and which came in as the second lowest of the 19 office markets tracked around Australia. Prime vacancy was the lowest in the country, at 0.9%.
“Right now, real estate is a cost and organisations engaging in cost reduction measures will seek to re-align their space requirements with future headcount expectations, so organisations will naturally be pulled towards the more cost-effective markets that maintain a strong offering of prime grade stock like Parramatta, North Sydney and Macquarie Park,” Lalic said.
Companies are also looking for buildings that are conveniently accessible for their employees.
Lalic said Parramatta had cemented its status as a second CBD, having the foundations for major public and private sector users such as the New South Wales government and Westpac, and NAB and being offered at a fraction of Sydney CBD rents, and boasting amenity for staff and being accessible by major public transport.
According to the Property Council of Australia, almost a quarter of the new supply for non-CBD markets over 2020 will be delivered in Parramatta.
North Sydney vacancy rose to of 8.5% over in the first quarter, attributed to the addition and completion of new development builds in the back half of 2019. Some 78,000 sqm of prime grade office buildings are being delivered in North Sydney in 2020, equating to nearly 10% of the total office stock in the market. These new developments have already received extensive pre-commitment by organisations such as Nine and tech giant Microsoft at Winten’s 1 Denison St.
In Macquarie Park, about 50,000 sqm of new office stock will be delivered this year. This includes 34,947 sqm having already completed at the NSW Government-tenanted Glasshouse building at 45-61 Waterloo Rd.
Public sector decentralisation activity into the major metropolitan office markets will continue to drive demand, as will organisations within the healthcare, education and technology sectors seeking close proximity to Macquarie University.
