The development and investment implications for industrial, residential, office and retail sectors in key Western Sydney hotspots are unpacked in Colliers latest white paper ‘Investing in the West: Strategic opportunities amid growth.’

Colliers Director in Charge, Sydney West, Frank Oliveri said; “Investors and developers are carefully weighing returns in the short term while considering the anticipated long-term demand generated by a flourishing Western Sydney ecosystem, backed by substantial infrastructure investments and population growth.”

“Astute investors will strategically time their acquisitions and development to ensure that the delivery of infrastructure and related costs do not adversely impact their return on investment,” added Colliers Director, Project Management & Planning, Engineering & Design, Adrian Miller.

The imminent opening of the Western Sydney International (Nancy-Bird Walton) Airport in 2026 is just one key influence seeing insitutional investors jump off the sidelines, accounting for 20% of overall investment in the Aerotropolis last year – an increase of 10 percentage basis points compared to the previous year.

Colliers Director, Joint Head of Sydney South West, Investment Services Nick Estephen said; “Intense competition for prime industrial land within the Aeorotropolis, was spurred by ESR’s Badgery’s Creek acquisition in September 2023, which signalled the preparedness of institutional investors to make decisive moves.”

There is currently around 1,340 hectares of industrial appropriate Enterprise zoned land available across the Aerotropolis, and 2.4 years’ worth of developable industrial land supply remaining across the rest of the Western Sydney market.

Colliers Managing Director, Industrial & Logistics, Gavin Bishop said; “As the demand for industrial space outstrips available supply, with 46% of the 2024 supply already spoken for, investment interest is set to soar in Western Sydney, one of the country’s most robust markets.”

Appetite is also increasing for Parramatta’s repositioned office assets, which present an opportunity to cater for the future of work in a commercial hub designed to rival the Sydney CBD, with new infrastructure and developments such as the $2.8 billion transformation of Parramatta Square, led by Walker Corporation Pty Ltd.

Repositioned secondary grade office assets enhance competitiveness in a market defined by the flight to quality. Vacancy levels for A Grade office stock only elevated by around 1% over the first six months of 2023, despite a boost of 22,000 square metres to reach 571,372 square metres. By comparison, B Grade office stock experienced no new supply and vacancy levels jumped by 18.5 percentage basis points from January – July 2023.

Colliers Director, Office Leasing, Chris Baltussen said; “Known for its historical scarcity of Premium office space to meet demand, the Parramatta market experienced swift absorption of new A Grade office stock in the first half of 2023, despite a development surge.”

Secondary grade office assets can reposition and achieve rental uplift with limited capital expenditure. For instance, Colliers partnered with Insignia Property Management Group’s architect to reposition two floors at 88 Phillip Street in Parramatta, reaping an uplift of net face rents from $480 - $510-$520 per square metre.

Colliers National Director, Sydney Metro Sales, Investment Services, John McCann said; “While discussions about repositioning developed office assets for Build-to-Rent (BTR) haven’t translated into actual sales within the Western Sydney market, commercial land transactions represent growing recognition of BTR as a viable option for the area.”

Fortune will also favour bold residential investors, with development and construction costs for both South West and North West Growth Areas proving competitive across the Sydney basin, averaging $130,556 and $142,238 per lot, respectively. By comparison, average development costs per lot throughout Outer Western Sydney suburbs is $140,528 and Illawara is around $254,489 per lot.

Colliers Managing Director, Residential, Diana Sarcasmo said; “Early-acting investors stand to gain from relatively competitive land and development expenses within Western Sydney’s South West and North West Growth Areas, while also capitalising on sales and rental prices, buoyed by unprecedented population growth across the region.”

“Evolution of the North West and South West Sydney Growth Areas is driving retail spending and population growth, enhancing demand for Neighbourhood shopping centres at the heart of communities,” added Colliers Head of Retail Middle Markets, Investment Services, James Wilson.

Western Sydney currently has 0.16 square metres of Neighbourhood retail floorspace per capita, below the national average of 0.19 square metres per person, indicating that the region is already undersupplied. Given population growth expectations and the current committed pipeline, the region will witness Neighbourhood floorspace per capita drop to 0.14 square metres per person by 2032.

For further insights regarding development and investment across Western Sydney, informed by the latest planning initiatives, developer sentiment and key agents specialising in the area, click here to view Colliers latest white paper: https://www.colliers.com.au/en-au/news/investing-in-the-west

Investing in the West: Strategic opportunities amid growth - Colliers