Sydney’s Second CBD Shows No Signs of Slowing Down

05 October 2017

Parramatta is the centrepiece of the generational change occurring in Sydney’s Western Region. Federal, State and local Government has demonstrated their commitment to the area through major infrastructure projects as well as signing long-term leases to occupy new office buildings. The private sector is equally involved with the likes of Walker Corporation, Charter Hall, Dexus and GPT all developing and/or investing in major office projects within Parramatta.

According to research from Savills Australia, the Parramatta office market continues to be the most exciting in Australia, as it transitions into “Sydney’s second CBD”. This is resulting in heightened tenant demand and substantial amounts of private and public sector investment.

Supportive of this, prime grade vacancy has fallen to zero and overall vacancy is the lowest of any major market at 4.3%, according to research by Savills Australia. Further, 133,000sq m of major pre-commitments have been announced, with all of these tenants relocating to Parramatta from the Sydney CBD.

75 George Street occupies one of the most prominent corners in the Parramatta CBD at the intersection of George and Smith Streets, and will hit the market next month, providing an opportunity to gain exposure to the Parramatta market through an institutional grade asset which is centrally located in the CBD, provides high quality office space and has multiple angles to it.

The freehold property is exclusively for sale through Graeme Russell, Simon Fenn, Ian Hetherington and Ben Azar of Savills Australia Capital Transactions on behalf of CorVal and offers ground floor retail, five office floors and 105 basement car spots.

The property is heavily underdeveloped on a substantial 2,668sq m* site with 9,568sq m of Net Lettable Area (NLA). The property is currently fully leased to 5 office tenants, 2 retail tenants and a car park operator, with major tenants including St George Bank (Westpac), HCF and UniSuper. The building has a three year Weighted Average Lease Term (WALE), 4.0 Star NABERS Rating and a net passing income of circa $4,752,566pa*.

According to Graeme Russell, Director, Capital Transactions at Savills, development approval had been obtained to add nearly an extra 2,600 square metres of net lettable area by adding two extra floors to the existing building. There is also the ability to land bank the property for a major redevelopment over the longer term.

“The existing improvements are high quality, fully leased and located on Parramatta’s best corner in the tightest major office market in the country. It all adds up to a compelling opportunity,” he said.

Leading architects Fitzpatrick & Partners, have prepared a scheme to develop a 36-level building of circa 30,550 square metres. This would be subject to council approval.

The twin tower design of the building provides large floor plates of circa 1,856sq m that are well suited to Government and major corporations, who are the dominant occupiers in the Parramatta market. The floors also split into two pods easily and are sub-divisible even further if required.

The office accommodation is high quality benefiting from natural light on three sides, full height windows and excellent floor to ceiling heights. The building has been well maintained with the most recent refurbishment works including a new ground floor foyer and full refurbishment of Level 5.

According to Simon Fenn, Managing Director of NSW at Savills, the Parramatta office market is one of the tightest in the country with Prime grade vacancy currently at zero and total vacancy at only 4.3%. The lack of good quality office space available for lease is driving rental growth in the market.

“The economic rents associated with the new office projects are setting high rental benchmarks. Existing office owners in the area are benefiting, as rents for existing office stock are naturally dragged up or reflect attractive value compared to new builds,” he said.

Sydney’s west is forecast to facilitate the majority of population and employment growth. The region’s population is predicted to increase by 52% between 2011 and 2036 with employment predicted to grow by an equally as impressive 55% over the same period.

Parramatta is witnessing a level of development that is delivering generational change which is solidifying it as Sydney’s second CBD. Major office, mixed use, retail, education and infrastructure projects are reshaping Parramatta.

The Public sector is driving change through its investment in infrastructure in Western Sydney, with projects such as Parramatta Light Rail, West Connex, Western Sydney Airport and Sydney Metro all underway.

75 George Street, Parramatta is offered for sale through Savills Australia via an International Expressions of Interest Campaign (EOI) closing 4pm on Wednesday, 8 November 2017.

*Approximate

 
 

Key Contacts

Graeme Russell

Graeme Russell

Director
Capital Transactions

Savills Sydney

+61 (0) 2 8215 8947

 

Simon Fenn

Simon Fenn

Managing Director - NSW

Savills Sydney

+61 (0) 2 8215 8888