_The changing perception of Parramatta
Once considered to lack the scale and vibrancy to become a major office hub, and viewed as a market driven solely by public sector tenants, Parramatta is under-going a period of rapid and substantial change that will transform its perception. The new Parramatta is well and truly upon us with the CBD now not just a place to work, but also to live and play. A new university campus, government commitments to new infrastructure, a pipeline of over 7,000 potential new apartments and institutional investment in the office market have all facilitated this change.
With the Western Sydney population set to grow from 2 million to 2.9 million by 2030, public and private investment into the region has been well overdue. The introduction of the Parramatta Light Rail and the proposed Metro West rapid rail link to the Sydney CBD will transform travel across Western Sydney and improve connectivity across Greater Sydney. This provides a positive outlook for the Parramatta Office market as more jobs will be created, and the pool of local talent will deepen, on the back of the population increase.
A new sense of vibrancy and life in the Parramatta CBD has been brought about by the 2017 opening of the WSU Parramatta City Campus. As a result full time international student numbers have soared by 33% over the past year to reach 3,610 in Parramatta according to the Department of Education and Training.
On the back of this success, a joint venture between UNSW and WSU has just been announced for a state of the art engineering campus to be built at 6 Hassall Street by the end of 2021.This is expected to bring a further 10,000 students into the CBD.
Another welcome addition to Parramatta will be the completion of the new Parramatta stadium in 2019 which will not only hold sporting events but provide the capacity for world class entertainment events to be brought to Western Sydney.
Further to this will be the relocation of the Sydney Powerhouse museum in Ultimo to the Riverbank of Parramatta. These projects will help Parramatta become a travel destination rather than just a place of work. This has led to luxury hotel brands expanding their footprint into Parramatta; including Hilton who are set to open 245 rooms in the heart of the CBD, along with the Sheraton with plans to open over 270 rooms.
This urban renewal has spurred activity in the office market. In total, there are over 600,000 sq m of new office projects in the pipeline. The new developments will see an abundance of prime stock come to market to be filled with a strong mix of both private and public sector tenants. NAB has led the way for the private sector with occupation of 43,000 sq m at 3PSQ from 2020.
A number of large private tenants are likely to follow, including IAG, Allianz and Westpac; each of which have market briefs for space in Parramatta that will diversify the tenancy mix and bring a new level of depth and scale to the market. Reflecting this, in the coming years Parramatta is likely to become the second largest office market in NSW, overtaking North Sydney and Macquarie Park by market size.
There has been a positive response from institutions to the improving office market and positive outlook in Parramatta. Once a tightly held market dominated by private investors, institutions have accounted for over 65% of transactions since 2017, with GPT, Charter Hall and Mirvac all acquiring assets. This institutionalisation of ownership in Parramatta coupled with a solid pipeline of new quality stock will help de-risk the market and reinforce Parramatta’s profile as an attractive investment destination for both local and offshore investors.
To read more on the Parramatta office market read the full report here