How would you characterise your market at the moment?
The Parramatta market remained patchy throughout Q1. Enquiries for A Grade stock has softened, primarily due to the fact that most A Grade tenants know there is a lack of suitable options. However B and C Grade enquiries from SMEs have increased.
Are there any trends you are noticing among the tenants you are talking to?
Tenants still prefer fitted-out options as access to capital remains difficult. We have noticed that enquiries from service industries have increased, particularly from recruitment and accounting/financial planning firms.
What do you think will be the biggest influence on your market in Q2?
The availability of good quality stock will be the key. Due to the tight vacancy rate, sublease opportunities may be the only variable option for tenants seeking quality office space. Currently, approximately 2,000 sqm of sublease stock is available.
What will rents and incentives do in Q2?
As vacancy levels continue to fall, we predict face rental to increase slightly during Q2, whilst incentive levels to remain stable, translating into a higher net effective rent level.
What should landlords do to adapt to these market conditions?
Where possible, B Grade or C Grade landlords should refurbish their assets to improve presentation and service standards. Landlords across all grades should try to review their tenancy mix to create larger contiguous spaces. For example, 100 George Street Parramatta has just undergone a major refurbishment from C Grade to B Grade standard, resulting in new lease transactions and rental increases of approximately 20%.
Office Leasing, New South Wales
Recent Leasing Deals
Market Balance, as at March 2012
Download a PDF of the Parramatta Q112 Market Overview