Potential tenants may have to look beyond West Perth’s ‘golden mile’ as the dearth of property sales and record low vacancy rates stymie those eager to position themselves in the West Perth market.
Potential tenants may have to look beyond West Perth’s ‘golden mile’ as the dearth of property sales and record low vacancy rates stymie those eager to position themselves in the West Perth market.
Like Perth’s central business district, West Perth is undergoing a period of excessively high demand for office space, with a fall-off of sales activity as investors opt to retain their investments and an escalation in rental prices, particularly among A- and B-grade premises.
Property Council of WA executive director Joe Lenzo said the vacancy rate in mid 2006 in West Perth had dropped below 3 per cent, falling even further below January 2006’s record rate of 3.7 per cent, while vacancy rates as at July 2005 were at 5 per cent.
“This [below 3 per cent] virtually means a full house [in the West Perth market],” Mr Lenzo said.
Jones Lang LaSalle West Perth specialist Tom Nattrass said that, in the 1990s, the average vacancy rate in West Perth was between 10 and 12 per cent.
“Over the past six to seven years there has been extensive development of luxury apartments,” he said. “The residential market has gone through a significant boom.
“In those years there was little demand for office space due to a lull in the market, however that has significantly changed.”
Mr Nattrass told WA Business News that tenants based in West Perth who were trying to expand their business had been unable to secure additional space in their existing building and have been forced to find office space elsewhere.
Great Southern Plantations public relations manager David Irkin said the company’s move to Hay Street in February 2006 was its third location in West Perth.
“Our several moves have been dictated more by the space than anything else,” he said.
“It’s better to have your own building than two storeys in a tower. In our new premises we have extra space to allow us to keep growing and not have to move again too soon.
“It was very hard to find larger accommodation…it’s not very common any more [in West Perth].”
Burgess Rawson (WA) Pty Ltd director Rob Selid said values for vacant land sales had recently exceeded $2,000 per square metre, with the majority being redeveloped into residential apartments.
“However, this is likely to change as the demand for offices increases,” he said. “We see room for the develop-ment of strata-titled office building in West Perth as companies and individuals look to hedge against increasing rents and purchase their own office accommodation.”
Mr Nattrass said West Perth tenants requiring new office space had moved to other markets, including Subi Centro, although similar vacancy rates there had placed further pressure on the market.
In order to meet the demand for office space by tenants, a number of offices within the West Perth vicinity are in the pipeline to be developed and completed by 2007.
Major projects with development approval and seeking tenant pre-commitment include: 18-32 Parliament Place (6,350sq m), owned by Pivot Group; 1 Cambridge Street (4,000sq m), owned by a private developer; 26 Thomas Street on the corner of West Street (3,823sq m), owned Sedna Properties; and 56 Ord Street (3,430sq m), owned by TRG Properties.
Mr Nattrass said the development of these buildings would help in providing a solution to the problem of limited space, but rents would continue to increase throughout 2006 as the space problem continued.
“The demand for West Perth office space, due to a booming mining sector, looks set to continue into the foreseeable future,” he said.
“This will result in tenants having to look beyond West Perth.”
