Persistently high office vacancy in Parramatta has the Property Council of Australia pushing for planning settings that let the CBD adapt to changing demand, rather than preserving land indefinitely for office use.
Property Council Western Sydney regional director Ross Grove said the case for flexibility is strengthened by figures showing vacancy has now sat above 20% for four consecutive reporting periods.
"These are not the numbers of a market experiencing a temporary blip. They point to a structural challenge that policymakers need to confront," Grove said.
According to the Property Council's latest Office Market Report, Parramatta's overall office vacancy rate rose 1.4 percentage points to 23.5% in the six months to July 2026.
New supply of 15,981 square metres entered the market, but net absorption was negative at minus 2,323 square metres, meaning more space came onto the market than was leased.
Older stock is proving the sharpest pain point: B Grade vacancy has held near 40% for an extended period, recorded at 39.9% despite positive net absorption of 2,916 square metres in that grade.
"Nearly four in every ten square metres of B Grade office space in Parramatta remain vacant," Grove said.
The trend isn't isolated to Parramatta. Vacancy climbed from 18.3% to 18.9% across Australia's non-CBD office markets over the same period — the reporting category Parramatta itself falls under — driven by low supply and negative tenant demand.
That's in contrast to Sydney CBD, where vacancy edged down slightly, from 13.8% to 13.3%, on the back of positive demand concentrated in the premium grade, underlining a two-speed market between city centres and surrounding hubs like Parramatta.
Grove pointed to build-to-rent housing as one way to address vacant office stock while easing Sydney's housing shortage, noting the format's single-ownership, professionally managed structure gives it flexibility if market conditions shift again.
"We are facing two challenges at the same time: persistently high vacancy in parts of the office market and an acknowledged housing shortage across Sydney," he said.
With no new office supply currently in Parramatta's short-term pipeline, and all 97,265 square metres of future stock still classified as mooted supply, any near-term relief for vacancy will likely need to come from a change in how existing buildings and sites are used, rather than from new construction.
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