But not enough developers saw the commercial potentialsof putting together commercial projects, opting instead for safer residential options.
By 2031 there will be 100,000 extra jobs in Parramatta but only a development pipeline of an additional 250,000 sq m of commercial space and 125,000 sq ms of that mixed commercial.
The dire shortage of A-grade commercial space has been highlighted in the CBRE report Parramatta Market Outlook 2016.
CBRE director of Advisory & Transactions Services, Office Ben Lalic said there are not enough developers prepared to take the risk of speculatively building without a tenant pre-commitment of at least 40 per cent of NLA.
“The reality is lending institutions want that guarantee of tenancy before backing any development,” Mr Lalic said.
“In the current market, residential development is much more profitable so that is what we are getting in Parramatta. In addition, there is a lack of B3 Commercial Core zoned land
in the CBD which is ready and unlocked for commercial development.
“There have been sites, such as V by Crown apartments, 111 George Street (“Duo”) and the old Cumberland Newspapers site, that originally had DA approval for office towers but were changed to residential.”
Mr Lalic said the problem of good commercial land going to residential was exacerbated by the strong residential market.
While praising Parramatta Council for its foresight in developing Parramatta Square and being proactive in planning to meet the forecast demographic needs, he said more could have been done in protecting sites from residential permitting zonings.
“There has to be some residential development in the CBD but, generally, it should be on the edge of the city to preserve those sites for new office development,” he said.
Mr Lalic said there were enough sites in Parramatta for high rise office development and would like to see more developers and businesses take the plunge to provide for the jobs growth predicted for the west and capitalise on the historically low vacancy rate.
Apart from the $2B Parramatta Square development that will deliver more than 145,000 sq metres of A grade office space, the other light on the horizon is the planned Westfield redevelopment that has the potential to provide up to an additional 150,000sqm.
CBRE Associate Director of Capital Markets Steve Simat lamented that there were not enough developers capable of putting together A-grade office developments.
Mr Lalic said that development trends were tied to demand, which at the moment was for residential.
“It is cyclical and confidence in the commercial market will return,” he said.
A combination of people wanting to work closer to home, major infrastructure and decentralisation of government agencies and large corporations will drive office space development.
Mr Lalic and Mr Simat said the Badgery’s Creek airport would be a major driver of commercial development, offices as well as industrial with Parramatta, Liverpool and Penrith benefiting the most.
But Parramatta would always be the capital of Western Sydney and the second CBD, despite strong competition from Liverpool and Penrith and to a lesser extent, Campbelltown.
Mr Lalic felt the race to build enough A-grade office space in Parramatta was “a marathon rather than a sprint”.
“We need to continue to promote Parramatta, to let businesses and developers know what the region has to offer,” he said.
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