GPT Tower construction to begin after QBE's tenancy commitment

The metropolitan office markets of Parramatta and Sydney's North Shore are putting up strong opposition to the CBD, with vacancy levels mostly falling over the past six months.

While there was a marginal upstick at Parramatta, it remains the lowest level of 3.2 per cent vacancy across the country. The North Shore, including St Leonards, Chatswood and Macquarie Park have all recorded positive occupancy levels.

According to the latest Property Council of Australia's Office Market Report, for the six months to July, Parramatta's vacancy rose from 3 per cent to 3.2 per cent, based on new supply.

GPT has one of the latest proposed developments, being its 26,000sqm, $235 million tower at 32 Smith Street, which has development approval and is awaiting to sign an anchor tenant, rumoured to be QBE Insurance.

Premium Grade office space vacancy has some wiggle room, rising from zero vacancy to 1 per cent.

"Parramatta continues to grow and develop, and we again see a very tight market in all grades of space - vacancy rates in B and C-grade stock dropped again with a big drop in Dgrade stock," Property Council NSW executive director Jane Fitzgerald said.

"This strong demand will be met with a significant amount of supply due to come online from 2019 onwards with nearly 190,000sqm to enter the market."

Parramatta is benefiting from a strong property market and we must continue to focus on encouraging new business and promoting a strong commercial core for the CBD. Any new planning policies to be introduced by the local council must be conducive to new investment.

Stephen Panagiotopoulos director, office leasing at CBRE says there are limited options from now till late 2020, which leave Parramatta as having the lowest vacancy rate in the country.

"With only one new development occuring in Liverpool, we are witnessing excellent inquiry from Government, project groups and consultants wanting to be in the heart of the south-west growth precinct and the proposed Badgerys Airport," Mr Panagiotopoulos said.

"New developments such as the brand-new Western Sydeny University facility in the core of Liverpool CBD, residential development and new development approval's being submitted, are signs of strong growth in the area."

In North Sydney, the PCA report says aggregate vacancy rates across all North Shore markets has decreased from 8.4 to 7.9 per cent in the six months to July due to positive demand and withdrawl. North Sydney dropped 1.6 points to a vacancy rate of 6.3 per cent and Crows Nest/St Leonards and Chatswood decreased to 9.9 per cent and 6.5 per cent over the period.

"North Sydney saw a stronger result due to 13,552sqm of withdrawls and 558sqm of net absorption," Ms Fitzgerald said.

According to JLL's national director, office leasing, NSW, Paul Lynch said there is a significant level of infrastructure projects being planned and presently under way by both North Sydney Council and the NSW government.

"The impact of residential development on the fringe of the North Sydney CBD, coupled with significant office developments such as Dexus' 100 Mount Street, is having a significant influence on the continued growth of North Sydney as a prominent business centre. It's also a persuasive influence in attracting corporates to relocate from the Sydney CBD," Mr Mynch said.