Office market optimistic as demand stands strong
(4 August 2022) Perth’s office market is building for future success with a surge in new office supply hitting the CBD.
According to the latest Office Market Report, released today, Perth CBD office vacancy has increased to 15.8 per cent, a 0.8 per cent rise since January 2022, driven largely by a 2.4 per cent increase in supply, which includes Dynons Plaza on Hay Street and The Atrium on St Georges Terrace.
Property Council WA Executive Director Sandra Brewer said the increased vacancy rate was only part of the story, and the data shows several reasons to be optimistic about the office market.
“What the results show, is that three years into the pandemic, the death of the office has been highly exaggerated,” Ms Brewer said.
“Overall, the fundamentals for the Perth office market are strong. Tenants are jumping at the opportunity to take up new space, and sub-leasing rates are the lowest in the country. These are all good signs of an improving market,” she said.
Savills Australia National Head of WA Graham Postma said the July statistics confirm demand in the Perth office market remains positive.
“Net absorption in the CBD for the 6 months to July was over 13,000 sqm and almost 11,500sqm in West Perth. Despite some uncertainty in the short term, the market is expected to continue with this momentum,” Mr Postma said.
“Job advertisements, a strong forward leading indicator of demand, are at record levels and exceed those seen in the previous boom of 2007.
“As the ‘war for talent’ rages the ‘flight to quality’ trend continues as tenants seek to ensure their offices offer existing and potential staff the best working environment. This is clearly demonstrated by the fact that net absorption has been focused on the highest quality grades in both the CBD and West Perth markets,” he concluded.
The West Perth market vacancy rate also improved significantly, with the fresh Property Council data revealing a 2.5 per cent decline in vacancy, the strongest improvement in all recorded markets nationally.
“The Perth CBD and its fringe are in a strong position to continue to grow. New projects have the highest pre-commitment levels in the country at 82.3 per cent and demand is well above historical levels,” Ms Brewer said.
“While vacancy still exists, particularly in lower grade stock, it will likely be absorbed quickly or be repositioned.
“The opportunity now is for the City of Perth and industry to work together and continue to promote the strengths, opportunities, and benefits of the Perth CBD as a prime destination for business.
“New projects and ongoing upgrades to existing buildings will continue to improve the attractiveness of the Perth office market and ensure our city’s ongoing prosperity,” Ms Brewer concluded.
Media contact: Megan Lack | M 0449252380 | E [email protected]