Australia's newest business magnet
Article3 min05 October 2017
Parramatta has long been the obvious candidate for Sydney’s second city. Now, an imaginative redevelopment of its centre will cement its status as a great place to do business.
Residents in western Sydney are used to undergoing long commutes to get to Sydney’s CBD, the traditional work destination for so many. But Parramatta, a western suburb 20 kilometres from the city whose history stretches all the way back to Sydney’s earliest colonial years, is now poised to emerge as a viable economic alternative to Sydney’s traditional CBD in its own right.
Demographers have for a number of years identified Parramatta and the suburbs surrounding it as the centre of Sydney’s population, but the long-awaited $2 billion Parramatta Square project will further underpin the transport hub’s claim to be Sydney’s second CBD.
Parramatta Square is a large commercial development in the business and historic heart of Parramatta. By attracting the elite of Australian business, it will dramatically scale up high quality employment opportunities available to the area’s well-educated population – and, with any luck, eliminate the need for that commute to the Sydney CBD.
Its not Riverfront
Comprising a three-hectare council-owned site with riverfront location in Parramatta’s business district, on completion Parramatta Square will feature 240,000 square metres of mixed-use space. This includes public, office and retail space. As well, the plans include a 90-storey apartment tower, which, if approved, would become the tallest residential building in Australia.
The first stage of the development, consisting of a $220.5 million vertical campus for the Western Sydney University, has already been completed.
The project is already leading to substantial growth in Parramatta, with the additional infrastructure supporting population increases and more jobs.
Still, things have only just got started.
The city’s population is expected to jump by 41,000 people over the next five years, to reach 271,000, according to a PwC Australia study.
The research also found the value of Parramatta’s economy will rise from $23 billion to $30 billion in 2021, and economic growth will nearly double from 2.4 per cent to 4.6 per cent, generating another 22,000 jobs.
Parramatta already has great cafes and restaurants.
What has been crucial to Parramatta Square’s success – and the growth of the Parramatta area – is improved connectivity. The state government has committed around $13.5 billion in transport infrastructure investment for a metro rail line running between Sydney’s CBD and Parramatta, as well as light rail in the area. Parramatta’s transport system will be fully integrated to these better links to the Sydney CBD, adding to the provision of buses and ferries and the road network.
There’s plenty of existing amenity in Parramatta, including great cafes and restaurants, and the city’s retail offering will improve with the development of Parramatta Square.
While the Sydney CBD will remain the number one centre for business in NSW, there are signs that the business community is recognising Parramatta’s rising importance.
Dexus’s Head of Trading Brenton McEwan says a range of factors have combined to see Parramatta finally realising its potential as a connected, vibrant city.
“Projected population, economic and jobs growth has led to an increase in demand for office space; combine this with planned infrastructure improvement and the lowest vacancy rate in the country; it’s all come together to create a perfect storm in Parramatta.” he says.
Parramatta’s office market outlook
Professional services firms Deloitte and KPMG are already in Parramatta, and more are relocating. PwC is moving into Parramatta Square, while NAB has committed to 40,000 square metres across one entire building in the development and government agency Property NSW has committed to another approximately 60,000 square metres of space in a second commercial building yet to be built.
There is so much demand for office space that Parramatta has the third lowest vacancy rate in the country behind East Melbourne and Southbank in Victoria, according to the Property Council of Australia. The vacancy rate fell from 4.5 per cent to 4.3 per cent in the 12 months to June 2017, and there’s no A-grade office space for lease.
With little office space available and plenty of demand, the market is expected to be tight for years. Parramatta hit this peak in terms of attractiveness as an office location over the past two or three years, according to McEwan. And, he says, it’s due to Increased investment and development of quality office assets from private sector experts and the support of a proactive local council focussed on improving amenity for workers.
It’s all come together to create a perfect storm in Parramatta.
Prior to that it was typically chosen by businesses that didn’t need to be in the CBD, such as call centres. A broad cross section of businesses are now moving into the area, from across the private and public sectors. They’re relocating from both the Sydney CBD and surrounding metro markets. And more are looking.
At the moment, McEwan says there is around 120,000 square metres in office space requirements from tenants, but only around 100,000 square metres scheduled to be built.
In addition to Parramatta Square and its offerings, another draw card for Parramatta’s office market is that space is more affordable than in the Sydney CBD. As is parking. But, notes McEwan, office rents in Parramatta are increasing due to the growing imbalance in supply and demand.
Commitment of public investment for infrastructure will incentivise more private investment and create momentum in the Sydney Olympic Park market.
Sydney Olympic Park next in line
Due to connectivity issues, with a light rail plan on ice and a metro plan that’s a decade away, the office market in Sydney Olympic Park is one step behind Parramatta at the moment.
The Greater Sydney Commission, however, is focusing on the area from Greater Parramatta to the Olympic Peninsula (known as GPOP) for planning, so growth is imminent.
McEwan says the commitment of public investment for infrastructure will incentivise more private investment, which will in turn create huge momentum in the Sydney Olympic Park market.
For now, the market remains affordable for tenants and connected to Parramatta via a nine-kilometre cycleway, among other transport routes.