Perth office market posts improving result

Stock image.
Stock image.

PERTH’S office market registered a strong start to the new year and the signs for the for the future are encouraging according to the Property Council of Australia.

Its latest Office Market Report showed the CBD office vacancy rate dropped to 18.5 per cent in the six months to January 2019, a 0.9 per cent fall from the July 2018 result and the first time the benchmark CBD vacancy rate has fallen below 19 per cent since July 2015.

Demand saw 6752sq m of CBD office space taken up over the reporting period, bringing the total net absorption figure for the 12 months to January 2019 to 15,333sq m.

Property Council WA executive director Sandra Brewer said the latest results showed the Perth market was picking up momentum.

“The January report has shown the benchmark CBD vacancy rate has continued its downward trajectory, and is now at the lowest point it’s been in over three years,” she said.

“When you consider there is no new office space officially in the pipeline for the Perth CBD after 2019, and business and economic sentiment is once again lifting, the signs for the office market and the broader industry are encouraging.”

A total of 64,819sq m of space was withdrawn from the market in the six months to January 2019, the vast majority of which was attributed to the Woodside building at 240 St Georges Terrace, Central Park, 125 St Georges Terrace and the Commonwealth Bank building at 150 St George’s Terrace, all of which are undergoing refurbishment.

A total of 55,000sq m was added to the CBD market over the period, with a further 70,897sq m due to come online this year.

No additional new space is in the pipeline in the medium term.

The West Perth office market also saw improvement over the period to January, with the vacancy rate falling 1 percentage point to 14.8 per cent, underpinned by positive demand in the A Grade sector.

West Perth tenants absorbed 5248sq m of space over the six months to January 2019, with just 2499sq m of space due to be added to the market in 2019.

As with the CBD market, there is no new office space in the pipeline for West Perth for the medium term after this year.

“There’s no question the broader Perth office market has experienced a difficult few years, but we are now seeing a steady decline in the vacancy rate and we’re moving in to a market where new supply will be limited and economic indicators are positive,” Ms Brewer said.

“At the same time, our market has diversified – rather than pinning leasing activity and activations to any one sector, building owners are actively exploring new uses and tenants for their assets.

“The CBD is now home to student accommodation, cinemas, and major new retail, office and lifestyle hubs, and that increased vibrancy and activity is good news for our city and for our office market going forward.”