Parramatta office market in major shake-up
The tightly held Parramatta office market has been shaken up by a major office sale and proposals for two new towers.
On the transaction front, the listed GPT Group has finalised its purchase of the Eclipse Tower in the western Sydney hub for $277.6 million as it bulks up in the area.
The trust bought the tower from superannuation fund Rest, which was an early mover in the Parramatta.
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It had picked up the building for $167 million in 2012 from Leighton Properties and Grosvenor Fund Management Australia.
GPT edged out prospective bidders, including international heavyweight CBRE Global Investors, after a battle for the tower that was marketed by agencies CBRE and Knight Frank.
The purchase, flagged by The Australian this month, reflected an initial yield of 5.34%. The complex sits across from Parramatta’s main bus and train interchange. The 25,700sqm office building is fully leased and has a weighted average lease expiry of four years.
However, in a crucial twist, tenant QBE is departing to anchor a new $300 million-plus GPT project in Smith Street.
The Australian revealed last month that GPT was in talks to snare QBE as a tenant for its planned 26,000sq m office tower at 32 Smith Street and it will take 13,600sq m of space.
GPT’s head of office and logistics Matthew Faddy says the group is increasing its exposure to one of Australia’s best performing office markets.
“We are pleased to be adding one of Parramatta’s best located office properties to our portfolio alongside our 32 Smith office development which is due for completion in late 2020,” Faddy says.
Parramatta’s office market has one of the lowest vacancy rates for A-grade office space nationwide and there is strong demand for quality office space, he says.
He says the NSW government’s infrastructure investment, including a new light rail, Metro rail and motorway connections, will reinforce Parramatta as Sydney’s second CBD.
GPT is not alone in proposing towers in the area, with Walker Corporation, Dyldam, Dexus, Mirvac and Charter Hall also planning developments.
Their plans may be dwarfed by shopping centre giant Scentre, which last year flagged plans for a massive new office tower in Parramatta CBD.
The group drafted architects Woods Bagot for advice on its proposed building, the Argyle Tower, to be built above Westfield Parramatta.
Now it has lodged plans for a 42-storey tower estimated to cost $492 million with the building to offer 112,000sqm of space. Scentre won concept-plan approval for a 25-storey tower in 2014.
This article originally appeared on www.theaustralian.com.au/property.
