The decision by Lang Walker's group to change his tower at Parramatta from residential to office and retail is a role reversal and reflects the increased demand for commercial sites.
It also shows that local councils are cognisant of apartment oversupply. The changes in prudential rules, the tightening of bank lending and changes by the Chinese Government on outbound investment are all having an impact on off-the-plan residential projects.
Experts believe more developers will now turn back to office sites, which are more profitable to a city as workers need daily food, drinks and clothing.
Walker Corporation launched what will be Australia's largest commercial office tower, following approval on Tuesday night by Parramatta City Council to convert the tower from residential to commercial use.
Mr Walker, the executive chairman of Walker Corp, said 8 Parramatta Square will become the centrepiece of the $2.8 billion Parramatta Square development and the largest commercial tower in the country.
At 55 storeys, the tower will feature large floor plates of up to 3000 square metres on the campus levels and 2400 square metres within the sky tower levels. The building will meet the highest environmental rating of any commercial space in Australia.
Architectural firm Johnson Pilton Walker (JPW) created the design of Towers 6 and 8 Parramatta Square, after winning a competitive design excellence process.
The PS8 Tower will be one of four towers in the Parramatta Square development and will adjoin the 31 storey Tower 6 building, creating a combined net lettable area of 125,000 square metres.
These two new buildings will add to the 120,000 sqm of commercial space being delivered in 2019 and 2020, bringing the total development to 250,000 sqm of A Grade commercial floor space, which on completion will house up to 23,500 employees.
"We are excited by JPW's designs for Towers 6 and 8, delivering large, highly efficient floor plates, allowing a wide variety of layouts and workspace options, as well as inter-connecting stairs, voids and atriums," Mr Walker said.
An economic study commissioned by the City of Parramatta Council found the extra commercial space created by Tower 8 would create an additional 10,000 jobs, resulting in an estimated $31.6 million in annual retail expenditure in Parramatta's CBD, compared with $19.2 million generated by a residential building.
There has been strong interest from a number of major ASX publicly listed and private companies keen to secure premium quality A-Grade commercial space in Towers 6 and 8, as well as the other Parramatta Square buildings, with pre-commitments announced for both the NSW Government and National Australia Bank.
David Borger, Western Sydney director of the Sydney Business Chamber, said the change from residential to commercial was a huge vote of confidence in the Parramatta commercial market. This is the first time in recent memory that housing is making way for jobs and great news for Western Sydney residents.
"Parramatta Square could house more than 20,000 workers and this will generate demand for significant new retail opportunities. We can expect greater retail choice catering to a much more diverse corporate market. This is a very exciting time for the city and further reiterates the fact that Parramatta is well on its way to becoming Sydney's dual CBD," Mr Borger said.
Supporting this commercial growth and influx of white collar workers into the city, the Parramatta area is currently the centre of $10 billion worth of infrastructure investment, including crucial public transport links.
Mirvac has also extended its reach into western Sydney with the purchase of 75 George Street for $86.3 million.
Mirvac's head of office & industrial, Campbell Hanan, said the acquisition provides Mirvac with exposure to the Parramatta CBD market, which has been one of the strongest performing markets nationally, with a prime vacancy rate that has averaged below 3 per cent for the past decade.
"This acquisition is well-timed to capitalise on $10 billion in committed infrastructure investment underway, which will transform Parramatta into a second Sydney CBD with significant scale," Mr Hanan said.
