Ray White Commercial has identified Parramatta in New South Wales as an area primed for long-term growth.

In its latest Between the Lines report, the agency found the suburb continues to benefit from a growing workforce and residential population, making it an attractive retail location.

Ray White Commercial NSW Western Sydney Director Joseph Assaf said cranes were set to litter the skyline for the next few years as more commercial and residential developments and infrastructure projects were completed.

“A new level of expectation will emerge by the growing population regarding the quality and type of retail on offer, which may impact both owners and tenants over the next few years," he said.
 
“While the CBD continues to endure much disruption due to new construction of properties and the light rail project, the long-term benefits for the city are vast.”

At a glance: 

• Ray White Commercial's latest Between the Lines report has outlined the long-term growth potential of Parramatta in New South Wales.
• An analysis of retail leasing deals during 2019 have highlighted that smaller shops under 100 square metres have increased by 3.44 per cent over the last year to average $932 per square metres.
• Ray White Commercial found the heavy local, private investor market has been active over the past few years keeping yields tight.

 Ray White Head of Research Vanessa Rader said the research included a survey of the Church Street retail strip survey, which was also analysed last year.
 
“The overall vacancy across the strip has seen some small uplift to 6.89 per cent from 6.35 per cent last year,” she said.
 
“There’s been minimal change across 134 retail shopfronts totalling 34,463 square metres surveyed this period."

The research divided the precinct into two zones to highlight some of the differing results.

According to the report, zone one (being the bulk of the northern mall precinct) has increased vacancy from 5.55 per cent to 7.58 per cent due to a number of evictions.
 
Food retailers continued to contribute the bulk of occupancy across this zone, totalling 45.20 per cent.
 
Across zone two, Ray White Commercial found there had been a reduction in vacancy from 10.89 per cent last year to just 2.53 per cent, due to a large vacation now withdrawn from the stock count.

Source: Ray White Commercial
 
Mr Assaf said despite the bright future, current leasing aspirations were tough across the Parramatta CBD strip, with some uncertainty remaining.
 
“Gross face rents achieved differ highly, dependent on the location and quality of the asset," he said.

"However, the average rents do fluctuate based on retail size.
 
“Analysis of retail leasing deals during 2019 have highlighted that smaller shops under 100 square metres have increased by 3.44 per cent over the last year to average $932 per square metres.
 
“That's within a range from $500psqm for more secondary assets to over $1,000psqm for more modern premises.”

Ray White Commercial NSW Western Sydney Managing Director Peter Vines added there had been a limited number of quality retail assets coming to the market across Parramatta over the last 12 months.

“This theme of stock being tightly held has been witnessed across the country, and with low interest rates pushing investment yields down, owners are keen to retain assets given the limited alternative investments on offer,” he said.
 
“Investment during 2018 reached $80 million behind results in 2017, while in 2019 we've seen $34.44 million change hands across a mix of both freehold and strata retail assets.”
 
Mr Vines said given the limited investment pool and reducing interest rates, investment yields continued to be pressured down.
 
“Across the Parramatta retail market, the heavy local, private investor market has been active over the past few years keeping yields tight,” he said.
 
“Current average yield is 3.75 per cent, slightly ahead of last period, however, the range of yields continue to tighten to range between 2.3 per cent and 4.8 per cent for quality stock and future development upside. 
 
“There’s no doubt that this is the calm before the storm, so investors and owner-occupiers would do extremely well to break into Parramatta before the redevelopment hits fever pitch.”

Click here to read full report.

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