Perth vacancy down as business braces for economic bounce back
The overall office vacancy rate in the Perth CBD has already peaked and is now in a steady downward trend, according to the latest Office Market Report by the Property Council of Australia.
The overall vacancy rate in the Perth CBD decreased by 1.3 per cent to 19.8 per cent (from 21.1 per cent), in the six months to January 2018.
This follows 12 months of positive demand for CBD office space in Perth, including 22,178sqm of net absorption over the second half of 2017.
Property Council WA Executive Director, Lino Iacomella said, “The stronger demand for office space in the CBD is a result of a recovering state economy, a cessation in the supply of new office space and the flight to quality by tenants in lower grade offices to higher grade stock, along with a migration of tenants from non-CBD offices to the CBD.”
“The Perth CBD office market has turned the corner, and positive demand for new office space has returned after five difficult years.
“This is further evidence of the strengthening WA economy,” Mr Iacomella said.
The positive in demand for office space was concentrated in the prime office sector of the CBD. The vacancy rate in Perth’s Premium Grade office sector decreased to 6.3 per cent (from 11.7 per cent) in the six months to January 2018; and A Grade office vacancy fell to 18 per cent (from 19.4 per cent).
Vacancy in secondary CBD office grade segments across Perth either increased or remained unchanged. Vacancy for B Grade CBD office space rose to 31.1 per cent (from 30.8 per cent) in the six months to January 2018.
A pause in the supply pipeline of new CBD office stock contributed to the lower vacancy. In the six months to January 2018 only 1,408sqm of new stock was added, which was offset by 1,300sqm of withdrawals. This follows a decade-long period of sustained additions to Perth’s CBD office stock.
Only one major project is confirmed to come online in the short term; the 48,484sqm Capital Square development, which is due in late 2018.
In Perth’s largest non-CBD office market, West Perth vacancy rose to 16.7 per cent (from 15 per cent) in the six months to January 2018. This was due to the addition of 4,803sqm of new office space and weaker demand for existing space.
Lino Iacomella | E [email protected]