Parramatta CBD office investment yields sharpen

A lack of stock and urgency by private investors to source quality investments has resulted in strong results for strata office sales in the heart of Parramatta, the epicentre of Western Sydney.

Ray White Commercial noted the demand for office strata was highlighted by the $650,000 sale at auction of a 63 sqm ground floor office investment at 3/4 Charles Street, Parramatta. It was sold by Ray White Commercial NSW-Parramatta’s Joseph Assaf for a sharp 3.62 percent yield.

Mr Assaf said smaller private investors have been particularly active in the strata office market, resulting in capital values averaging $4,520 per sqm, which is affordable in comparison to the highs achieved in the Sydney CBD of $7,614 per sqm.

“However, a lack of stock and urgency to source quality investments has resulted in results such as the sale of 3/4 Charles St,” he said.

“The yield was 3.62 per cent while the capital value was $10,317 per sqm.”

Ray White Commercial NSW Director Michael Ajaka said the robust performance of the Parramatta CBD office market over the last five years has been observed by many larger institutions and both domestic and international private investors who have been instrumental in reducing investment yields.

“Currently prime investment properties have averaged yields from 5.75 percent to 6.5 percent range,” he said.

“Recent sales include 80 George St, a B grade office building which sold for $51.88 million in October, 2016, to a private Asian investor on a yield of 8.50 percent, while A grade Century Centre at 18 Smith St changed hands in September, 2016, for $84.03 million, representing a yield of 6.88 percent.”

Ray White Commercial Head of Research, Vanessa Rader, said the Parramatta CBD office market has been yielding strong results over the last few years.

“There is still more than 200,000 sqm of office stock destined to be added in the Parramatta CBD during a time of steady employment demand which is putting pressure on vacancy rates and improving rents achieved,” she said.

“New developments in office and continued residential development coupled with changes to infrastructure means Parramatta will remain a construction zone with road closures and cranes on the skyline for the next few years.”