VACANCY rates have risen in North Ryde and fallen in North Shore and Parramatta, but below the surface tells a different story.
North Ryde’s office market continued to expand, vacancy rates rising to 8.7% from 6.1% in January, according to the Property Council’s Office Market Report.
But Property Council New South Wales executive director Ken Morrison said North Ryde continues to forge ahead in the provision of quality office space.
“Only three short years ago vacancy rates in North Ryde were in double digits. Today, North Ryde is a major economic growth zone, well supported by public transport and with the commercial zoning capacity to still double in size.
“The vacancy increase recorded this period can be comfortably attributed to the additional 33,587 sqm of office space entering the market since January 2008,” he added.
“After a period of phenomenal demand, North Ryde has moderated back in line with historical levels.
“What other business centres like Parramatta and North Sydney need to recognise is that North Ryde will experience continued growth with 53,460 sqm due this year and a further 39,700 sqm to be delivered in 2009. This equates to a further 14% growth in less than 18 months,” Morrison continued.
The OMR also found the North Shore office market has bounced back with healthy demand for A Grade office space driving vacancies down in North Sydney and Crows Nest/St Leonards.
Total vacancy rates for the North Shore dropped from 10.6% in January 2008 to 9.2% in July after the Optus move to North Ryde.
“North Sydney’s office vacancy rates have recovered nicely with a net absorption of 20,590 sqm, the strongest since July 2000. This bounce back means vacancy rates are now at 8.6%, a definite improvement from 11.4% posted in January this year.
“Vacancies in Crows Nest and St Leonards also dropped from 8.9% to 7.2% in the last six months, the lowest in seven years,” he added.
Morrisons said in contrast, Chatswood vacancy rates have risen from 10.5% to 12.8% on the back of new supply of 12,000 sqm (the highest in over 12 years) and continuing weak demand from tenants.
“With a total of 36,500 sqm of office stock due to enter the North Sydney market later this year and a further 33,505 expected in the medium term, North Sydney Council must address its decaying local infrastructure by accelerating its public domain plans.
“More of the business community’s rates should be invested back into the business district to attract and retain major tenants,” he added.
Meanwhile vacancy in Parramatta has reached the lowest levels in over four years.
But the OMR found whilst vacancy has decreased slightly, demand for office space in Parramatta has slowed in the last six months. A slight net withdrawal of office space in this period drove vacancies down from 7.4% to 7.3%.
Morrison said there has been strong demand for job growth in Parramatta in recent years but the market has becalmed in the last six months.
More than 64,000 sqm of new office space is scheduled to enter the market between now and 2011 so investor confidence remains.
“Consider also that our data doesn’t take into account Parramatta City Council’s Civic Place development.
“For now, Parramatta’s only real worry is the competition posed by North Ryde as it continues to expand and reap benefits of the Chatswood to Epping rail line due to open next year,” Morrison concluded.
Australian Property Journal
