Perth’s office market is recovering, with vacancy rates improving slightly over the past six months. The CBD’s vacancy rate has decreased to 15.1%, down from 15.5% in mid-2024. According to CBRE’s latest Office Market Report, which was presented at the PCA Office Market Report Event Perth remains resilient, particularly in contrast to rising vacancy rates in cities like Sydney, Brisbane, and Hobart.
Demand is also rebounding, with 25,186 sqm of office space newly occupied after two consecutive periods of decline. Lease renewals are rising, and business tenants still searching for office space are becoming more selective, prioritising high-quality, well-designed offices that better support their needs.
Christian Formby, Founder of Hub Interiors—a key player in Perth’s commercial fitout industry—sees this as a defining moment for workplace design:
“Increasingly, businesses view their workplace environment as a competitive advantage, and we are witnessing an unprecedented demand for high-quality workspaces that enhance employee experience. The traditional office is no longer just a place to work—it’s an environment that needs to inspire and support employees.”
This demand also drives a shift towards ESG-compliant fitouts, with sustainability now a key factor in leasing decisions. Businesses seek environmentally conscious solutions that align with corporate values and regulatory expectations. In response, Hub Interiors is integrating sustainable materials, energy-efficient systems, and advanced workplace technology into its designs.
While construction costs have risen, Formby believes investing in creating environments delivers long-term benefits for building owners and business tenants:
“Yes, fitout costs have increased, but the return on investment for a well-designed space is undeniable—improved productivity, enhanced employee retention, and stronger client impressions.”
Premium and A-Grade buildings continue to dominate, increasing rental rates and reinforcing the importance of well-executed office upgrades. Leasing activity in prime locations—such as 9 The Esplanade—remains strong, with businesses eager to secure spots in Perth’s competitive market. Larger organisations are also investing in quality fitouts to maintain high occupancy rates and support long-term growth.
Experts predict the next commercial supply cycle will begin in 2029, with rental growth expected to rise by around 26% over the next five years. As leasing incentives decline from 30-40%, businesses will increasingly prioritise workspaces that deliver lasting value.
Perth’s commercial market is undergoing a correction, with construction costs remaining high but driving supply across all sectors. Industrial demand is strong, with land shortages pushing rents upward, while the office market is set for continued growth, as limited supply and strong net absorption reduce vacancy rates and increase net effective rents.
However, economic uncertainty looms, particularly around the Trump presidency and trade tariffs, which could fuel inflation and impact the Australian dollar, as seen in 2018. Perth’s data centre market is still developing, creating investment opportunities, while a supply gap in CBD office space is emerging, further tightening vacancy rates. At the same time, retail landlords have a chance to meet growing demand for high-quality experiences. With office space demand in Perth only set to strengthen, businesses must adapt to these shifting market dynamics.
Formby views this as an opportunity for businesses to rethink their office strategy:
“The conversation is no longer about just having an office. It’s about creating an experience that engages employees, drives innovation, and positions businesses for long-term success.”
Meanwhile, 41,193sqm of new office space is set to enter the CBD in 2025, bringing fresh opportunities—and increased competition—for businesses navigating the leasing market. With a strong pipeline of new office developments and intensifying competition for tenants, now is the time for building owners to ensure their space stands out.
