This article is from the Australian Property Journal archive
PARRAMATTA’S commercial market has kicked into overdrive, with Walker Corporation securing a second major pre-commitment from the New South Wales government at Parramatta Square, while Brookfield is seeking offers of around $400 million for the Jessie Street Centre office complex.
Meanwhile, the state government has finalised acquisition of a riverside car park site from the City of Parramatta that will be used for the Powerhouse Precinct arts and culture hub, which News Corp has reported as totalling $140 million.
Brookfield has reportedly enlisted Cushman & Wakefield and Knight Frank agents to market the 53,901 sqm A-grade Jessie Street complex at 2-12 Macquarie Street. It comprises a four-level office podium and 15 levels of office space above, as well as 337 parking spaces on a 13,530 sqm site. A major refurbishment was completed ten years ago and the building is leased to government and legal tenants.
A short distance away, Parramatta RSL has just listed its 1,874 car park site at 7 Macquarie Street for sale. It is zoned B4 Mixed Use, the most flexible zoning offered in the Parramatta CBD, with potential for a development of up to 11,200 sqm.
At Parramatta Square, Walker Corporation has just been awarded a Property NSW tender to lease up to 43,800 sqm of office space. Around 4,200 state public servants will move into 6 Parramatta Square from 2021 in a 12-year lease with two further five-year options.
Three state government departments were already signed up for the project after Walker Corporation won a tender two years ago for 62,000 sqm of space within Tower 4. Towers 3 and 4 are fully pre-committed, with National Australia Bank locked in, while Link Market Services has also just been announced as a tenant. The financial services group will relocate their Sydney offices from Rhodes to Parramatta Square, and has also committed to Walker Corporation’s Collins Square precinct in Melbourne’s CBD.
Parramatta Square is now 75% pre-leased, with more than 170,000 sqm of space committed. Construction of the four-tower, three-hectare precinct is well underway, with the first tower – Tower 4 – expected to be completed in November, and the whole project due for completion in 2022. The precinct features the University of Western Sydney Campus, community facilities, a civic building, community centre, library and 250-metre long public domain.
Walker Corporation was given the green light over summer to develop the two remaining commercial towers, including the Aspire tower, which will bring another 125,000 sqm office space to the market.
The strength of the office market prompted Walker Corporation to convert its planned 600-apartment Aspire tower at 8 Parramatta Square to a 71,000 sqm A-grade office building.
Recent Colliers data showed Parramatta generated the highest office rental growth over the 12 months to March of the country’s metro office markets with 12.3%, while Sydney’s second city is the tightest office market in Australia, with a vacancy rate of 3.0% as at January, according to Property Council data, while the combination of a severe shortage in prime space has the A-grade vacancy rate sitting at 0.8%.
“We expect to experience a strong flow of pre-leases off the back of the two anchor tenants signing long-term leases in the project, which is one of the largest urban renewal projects in the country and will see Parramatta city rival Sydney’s CBD in terms of amenity and high quality commercial space”, Walker Corporation’s chairman, Lang Walker said.
“Parramatta has the lowest vacancy rate of any office market in Australia and is being enhanced by a range of very important infrastructure projects, including light rail, the promise of a new rapid transit metro, the new Parramatta Stadium, Powerhouse Museum and other important public spaces.” Walker said.
The entirety of Parramatta Square is being built to a minimum 5 Green Star rating.
Hadley Green Investment Group has just capitalised on the strong market conditions and netted a tidy profit on its $44.3 million sale of the A-grade building at 9 George Street. Singaporean companies Roxy-Pacific Holdings and Tong Eng Group combined to pick up the 33 Argyle Street building for $40.8 million late last year, with an eye to the site’s development potential, while Coombes Property Group and Drivas Property Group’s have approval for a $227 million, 25-storey A-grade office tower at 50 Macquarie Street.
Dexus has received approval for a 33-storey office tower at 140 George Street, and Scentre Group has plans for a 100,000 sqm tower of 40 levels above the existing shopping centre.
Major players also with investments in the market include GPT, Charter Hall and Mirvac, and Dexus. BlackRock acquired the A-grade KPMG building at 91 Phillip Street for $57 million, and GPT made a second play in the city in August with the $277.6 million acquisition of the Eclipse Tower at 60 Station Street.
GPT recently secured QBE as the anchor tenant for its $300 million 32 Smith Street development.
Australian Property Journal
