According to the January 2026 Parramatta CBD research report, the market recorded 6,958sqm of positive net absorption, while overall vacancy rose to 22.1 per cent, largely due to the return of refurbished stock such as the Jessie Centre.
Encouragingly, the underlying leasing fundamentals remain solid. Competitive occupancy costs and improving infrastructure continue to position Parramatta as a compelling alternative to traditional office markets in the Sydney CBD and North Shore.
“Despite the headline vacancy figure, the Parramatta market continues to demonstrate resilience,” said Peter Vines, managing director of RWC Western Sydney.
“Businesses are still actively choosing Parramatta for its accessibility, amenity and cost advantage compared with other metropolitan office markets.”
Infrastructure strengthening long-term demand
Major transport infrastructure continues to reinforce Parramatta’s long-term growth trajectory.
The opening of the Parramatta Light Rail and ongoing progress on Sydney Metro West are significantly improving connectivity between Western Sydney and the wider metropolitan area.
While recent completions have temporarily elevated vacancy levels, improved accessibility is expected to support sustained tenant demand in the years ahead.
“Parramatta’s connectivity story continues to strengthen,” said Mr Vines. “As transport infrastructure comes online, the CBD becomes an increasingly practical and attractive option for businesses looking for quality space outside the traditional core markets.”
Investment market stabilising as capital targets value
The investment market also showed signs of stabilisation throughout 2025.
Prime yields have held firm at 8.0 per cent, while total office transaction volumes doubled to $295.8 million during the year. Investors are increasingly attracted to the market’s below-replacement cost pricing and stable income returns averaging 6.3 per cent.
According to Peter Vines, this dynamic is drawing counter-cyclical capital seeking long-term exposure to Western Sydney’s commercial centre.
“Investors are recognising the long-term fundamentals of Parramatta,” he said. “Pricing has adjusted to a point where buyers can secure institutional-grade assets below replacement cost while still achieving stable income returns.”
A two-speed office market emerging
One of the clearest themes in the research is the growing divide between upgraded assets and ageing stock.
Vacancy within B-grade buildings sits at approximately 40 per cent, compared with 18.5 per cent in A-grade assets. However, the data shows that refurbished B-grade buildings absorbed 3,728sqm of space over the past six months, highlighting strong tenant appetite for upgraded secondary stock.
At the same time, incentives across A-grade space remain elevated at 35-45 per cent, reflecting competition among landlords for high-quality tenants.
“Forty per cent vacancy on unrefurbished B-grade and active absorption on upgraded B-grade; that's not a coincidence,” said Mr Vines.
“Tenants have made their position very clear. The question now is whether owners have the conviction to invest, or whether they wait until their only option is conversion.”
This divergence highlights a broader structural shift taking place across Australian CBD office markets as landlords adapt buildings to the expectations of a hybrid workforce.
The office is not dead in Western Sydney
Despite ongoing national debate about the future of office work, the Parramatta data paints a different picture.
Sublease availability has fallen to just 0.7 per cent, suggesting businesses are holding onto their office space rather than offloading it. Parramatta also recorded the second-highest office absorption of any NSW market, behind only the Sydney CBD.
“A 0.7 per cent sublease rate tells you businesses aren't abandoning their offices - they're holding space because they expect their people to be in it,” Vines said.
“The vacancy story in Parramatta is really about too much supply returning at once, not a collapse in demand.”
Market self-correcting through stock withdrawals
Another key trend highlighted in the research is the gradual contraction of Parramatta’s office inventory.
Net supply in 2026 is forecast at negative 41,505sqm, as ageing buildings are withdrawn for residential and mixed-use conversion faster than new developments are delivered.
Total office stock currently sits at 974,405sqm, with vacancy forecast to compress from 22.1 per cent today to approximately 18.4 per cent by mid-2028.
“The market is self-correcting in a way that doesn't get much attention,” said Mr Vines.
“Buildings that can't compete as offices are being repurposed - and that process is doing more to improve vacancy than any amount of new leasing activity could.”
Refurbishment the key asset strategy
With limited new office development expected in the medium term, refurbishment and asset repositioning are emerging as the dominant strategies for landlords.
Landlords are increasingly focused on proactive asset management, tenant retention initiatives and improved building amenity to maintain occupancy and protect asset values.
“B-grade office buildings face an existential choice: refurbish or exit the market entirely,” Mr Vines said.
“The Parramatta market is becoming a clear example of the two-speed office economy emerging across Australian CBDs.”
