With Parramatta office sector nearing a full house, there has been an overflow to Bankstown, according to new research.
Western Sydney University is also set to open a Bankstown CBD campus and coupled with major infrastructure projects, office demand in Bankstown is expected to increase.
The strong population growth and diverse employment opportunities have seen office and residential vacancies tighten while demand to buy and lease in both sectors continues to strengthen, the latest Knight Frank report, Bankstown Insight has found.
Knight Frank research and consulting director, Paul Savitz???, said favourable local economy and solid business growth has continued to place downward pressure on the Bankstown office vacancy rate.
"As at October 2017, the Bankstown CBD's office vacancy rate measured 3.8 per cent, down from 4.6 per cent in January 2017 and 6.2 per cent in January 2016," he said.
"Notably, the bulk of Bankstown's vacant office stock exists in secondary-grade buildings with tenant demand being focused on the A-grade market. As at October 2017, the A-grade vacancy rate totals just 0.9 per cent, compared to 6.1 per cent for the secondary market.
"By comparison to other major and suburban office markets, the office vacancy rate in Bankstown is tight," he said.
According to the report, as at October 2017, the Bankstown CBD had 58,465 sq m of office space, 45 per cent of which is for A-grade space. Notably, this high provision of A-grade space is the result of Bankstown's two largest office buildings: 2-14 Meredith Street and the Bankstown Civic Centre.
Mr Savitz said the number of office-based businesses in and around the Bankstown CBD has increased 4.7 per cent over the past two years. It has been this growth that has led to improving fundamentals in the office market as more businesses require office space.
"New supply will initially stem from 57 Restwell Street, which is forecast for completion in August 2018," he said.
Knight Frank director of metropolitan sales and capital markets, Wally Scales, said that in 2016, Sydney non-CBD office markets recorded $4.5 billion in office sales, which marked the highest investment level on record.
"So far in 2017, $2.4 billion in suburban office sales has been recorded, underpinned by the purchase of value-add and higher yielding opportunities. Most of this activity has occurred on the north shore and opportunities in western Sydney remain scarce due to owners anticipating further value growth before seeking to trade," Mr Scales said.
The rise in population in the area has also attracted retailers, with the three new lease commitments at the Home Focus Bankstown centre in western Sydney.
Focus on Furniture has opened its doors at the centre's former Freedom Outlet store, after signing a seven-year lease on the 3365 sq m space.
Other new retailers at the centre include Vans Discount Centre, which has committed to a five-year term on 606 sq m and Supplement Warehouse, which will occupy 227sq m on a five-year term.
Rentals in the vicinity range around $250 per square metre net.
CBRE's Shane Cook said the recent transactions added to the centre's already strong retail mix.
