Parramatta developers have thrown down the gauntlet to its rival central business districts of North Sydney and Sydney, with a new project as part of the $2 billion redevelopment in its Civic Place.
Under the scheme, the Parramatta City Council has approved development applications to demolish its Darcy Street council offices and the Civic Place Library building in preparation for the next stages of the $2 billion Parramatta Square urban renewal project.
The council offices, library and other council-owned property along Darcy Street will eventually make way for high-end commercial office space and the Aspire residential tower.
Lord Mayor of Parramatta Cr Scott Lloyd says the demolition will be carried out by the preferred developers which are expected to be selected mid-2015.
This will add to the explosion of development in the area, where the number of cranes on the skyline can be seen for miles.
"Located in the heart of the CBD, the three-hectare site is set to reinforce Parramatta's position as Sydney's dual CBD," Cr Lloyd said.
"Construction work has begun on Stage One of the project, a $220.5 million commercial tower which will accommodate a new multi-level campus for the University of Western Sydney."
The development has not been lost on investors with listed groups GDI Property and Growthpoint Property making significant commitments in the area through large deals including the Parramatta Justice Precinct and 80 George Street.
There is also a new wave of high-end tenants arriving including KPMG and government offices.
The has led to prime vacancy in Parramatta being the tightest CBD at 3 per cent, when compared to all markets monitored by JLL in Australia.
Scott Butler, JLL associate director of leasing at Parramatta said the city is changing rapidly and as a result, there is significant growth potential in the office market.
"Large projects, in particular Parramatta Square, and $2.8 billion of infrastructure expenditure will reinvigorate the region, and undoubtedly attract some big name tenants," he said.
"New developments will be pre-commitment led. The future University of Western Sydney city campus is a key example of this. Parramatta Square Stage 6 will draw more investment, as 120,000 square metres is planned for the development. We will likely see significant pre-commitment for this development in the next 12 months."
Andrew Ballantyne, JLL national director of research in Australia said low vacancy and a shortage of contiguous options have pushed up rents.
"Parramatta leads the nation in terms of effective rental growth. We recorded gross effective rental growth of 10.1 per cent over the 12 months to the first quarter of 2015. The increase in rents was driven by face rents as incentives remained between 20 per cent and 24 per cent," he said.
