The ‘house full’ sign is well and truly up in both the CBD and West Perth, with Perth office vacancies contracting by more than 60 per cent in the past six months to a record 3.5 per cent, according to an office market report by the Property Council of Australia.
In West Perth, vacancy rates tightened to 3.1 per cent in the period and A-grade office space fell to a low of 1.9 per cent.
With little new office space expected to come onto the city market within the next three years due to the reluctance of tenants and financiers to commit, the situation is likely to move from critical to crisis.
Property Council of WA executive director Joe Lenzo said resources companies had continued to underpin the demand for office space in the past six months with Rio Tinto, Woodside, Worley Parsons and Gull Petroleum all taking additional high quality space.
The only project to add significant space to the market in the period was Cape Bouvard’s Allendale II, to which Alinta had pre-committed to the entire 7,799sq m of space.
In July, A-grade office vacancies in Perth fell to 2.7 per cent, a drop by a full percentage point from January.
Mr Lenzo said the lack of office space in Perth had now reached a critical level.
Colliers associate director research consultancy, David Cresp, said rental prices had also shifted accordingly, with A-grade face rents in Perth up 40 per cent during the past year, and premium space rising by 20 per cent in the same period.
Mr Cresp told WA Business News premium office rents in Perth were averaging $440/sq m, but were approaching $500/sq m in current deals.
“It’s scary when you consider this strong demand continuing with the total lack of available supply,” he said.
Rentals for A-grade space in Perth were approaching $400, and West Perth was charging similar rates.
Mr Lenzo said only 15,070sq m of refurbished space was expected to re-enter the Perth market during the next two years.
“Surely the time to start building some of the 100,000 square metres of planned new stock is today,” Mr Lenzo said.
Answering the call are ISPT and Pivot Group, which are believed to be moving ahead with their 25,000sq m premium grade office tower above 100 St Georges Terrace, without pre-commitment from an anchor tenant.
