Property Council vacancy figures for the CBD office market show Perth’s vacancy rate has dropped to 13.4 per cent with 17,000 square metres of space newly leased in the six months to January 2005.
Property Council vacancy figures for the CBD office market show Perth’s vacancy rate has dropped to 13.4 per cent with 17,000 square metres of space newly leased in the six months to January 2005.
These figures reflect the first drop in vacancies in three years, and while Perth still has the highest vacancy rate of all Australian capital cities, take-up of office space in Perth over a 12-month period has been more than 45,000sq m.
The additions of the Woodside and Ernst & Young buildings have increased Perth’s office market supply over the past year, but that space has been easily absorbed by the market.
Property Council executive director Joe Lenzo said organic growth was a key feature of the council’s findings, particularly from the resources and professional services sectors.
“There is a fundamental change in the Perth CBD office market from being a supply led market to a demand led one,” he said.
“In the next couple of years the market will firm up quite considerably, and this will continue until the next major office development is ready.
“Businesses are increasingly confident with the economic prospects in WA and are choosing high-quality accommodation offered by property owners.”
Savills director of commercial leasing Graham Postma said the Property Council figures were positive and that there was an “extraordinary” amount of net absorption for the year with both Woodside and Ernst & Young coming online.
“The Property Council has always had a time lag in their figures, and in terms of the market now it is probably one percentage point lower due to a lot of recent activity,” he said.
“Figures for July this year should reflect a dramatic positive change for Perth.
“Some people would argue that construction should have begun six months ago on a new project to help create supply over the next few years.”
Mr Postma said that, with the constant influx of projects into Perth, a shortage of skilled labour precluded some projects coming to the state.
NSC Corporate joint managing director Steve Carulli said the figures were reflective of a healthy economy, and there was likely to be a problem in the next few years with insufficient supply to meet demand.
Colliers director of agency Ian Campbell said the market had moved on from boom-bust times and was entering a long-term positive cycle.
Jones Lang LaSalle director of office leasing David Evans said it was likely that rents would increase, but would take another 12 months for incentives to start dropping off.
“In terms of new supply I think that the market will sustain being drip fed for a while, but will see a few small new buildings over the next two years,” Mr Evans said.
“We are seeing tenants squeezing as much as possible out of workspace ratios.”
Carpark rents had also risen recently which was becoming costly for tenants in the CBD, he said.
West Perth vacancy rates rose to 8.5 per cent from 7.8 per cent six months earlier, but this has been attributed to one large tenant, Fleur, leaving a small market and therefore adversely affecting figures.
