COMMERCIAL vacancies in older buildings are being overlooked in favour of those in new developments, according to Property Council executive director Lino Iacomella.
Despite high vacancy rates for commercial offices across the state – the Perth CBD was the worst performer nationally with a rate of 22.5 per cent – Mr Iacomella said a recent survey had shown a slight decrease in new office tower vacancies as tenants took advantage of competitive rentals and chose them over older, pre-existing options.
With Fremantle heavy with heritage buildings, it is a trend that could worry local commercial property owners as the City of Fremantle continues to push for new developments such as the $250m Kings Square project and the 1500 office workers it is expected to house.
Mr Iacomella said the State Government move was a welcome addition for activity centres such as Fremantle but care needed to be taken when moving businesses away from the Perth CBD.
“The attraction of suburban office markets depends on the number of local businesses and local consumers and clients,” he said.
City of Fremantle economic development and marketing manager Tom Griffiths said the latest audit figures from October 2016 showed a city centre vacancy rate of 10.2 per cent, up from 9.2 per cent in January of the same year.
“Fremantle’s vacancy rates have remained relatively stable over the past few years which compares favourably to other major commercial centres in WA, including the Perth CBD,” he said.
“The raft of new developments coming online soon will help council continue to make pro-gress towards the goal of attracting more residents, workers and visitors to the Fremantle city centre and as a result we expect vacancy rates and general business confidence will also improve.
“The High Street Mall is a great example of how higher-than-average vacancy rates can be turned around with a strategic marketing and leasing strategy and landlords working alongside the city to improve an area.”
He said the new developments were not expected to make things worse.
“Until the opening of Atwell Arcade, Fremantle was the largest centre in Perth without A Grade office space and this has been a problem for some time,” he said.
“Fremantle offers an attractive lifestyle alternative to the Perth CBD, has well-established transport links and is home to a range of industries so the demand for quality office space is there, but supply wasn’t.
“Atwell Arcade is now 95 per cent leased and the office development at Kings Square is pre-committed and underpinned by 1500-plus State Government office workers.”
The Property Council believes the worst is over and expects the property market to pick up in the next two to three years.
Mr Iacomella said diversity was the way out of the down-slide.
“The key to achieving lower office vacancy rates will be attracting a more diverse group of business tenants as well as an end to the contraction in demand for office space businesses that service the resource sector,” he said.