Thursday, 1 February 2024
MEDIA RELEASE
Perth defies national trend in office vacancy, as only capital city to record improvement
Perth has defied the national trend by recording the only decrease in office vacancy among all capital cities, according to the Property Council of Australia’s latest Office Market Report.
Perth’s CBD office vacancy fell from 15.9 per cent in July 2023 to 14.9 per cent in January 2024, marking the city’s lowest vacancy rate since 2015.
WA Interim Executive Director Emily Young said the reduction in vacancy rates was extremely encouraging.
“Perth led the nation in the return to the office. It has also continued to demonstrate economic resilience against a backdrop of national headwinds,” Ms Young said.
“These conditions have and are likely to continue to support improvements to the office vacancy rate in Perth – the “Not only is more office space being leased, but the sublease rate remains extremely low, indicating businesses are fully maximising their leased space and will need to take on new leases to support future growth.
“The city is buzzing with excitement, and the addition of world-class projects, including a new mixed-use precinct at Elizabeth Quay, the Edith Cowan University city campus and plans for a revamped Convention Centre, will attract more businesses to look west.”
Despite the improvement, vacancy has not yet fallen below the historic average rate of 13.7 per cent.
“There is more that can be done to help support improvements to older office building experiencing long-term vacancy,” Ms Young said.
“We have raised with state government opportunities for incentives for commercial buildings that adopt better environmental practices and the opportunity for government leadership in the assets they lease and own.
“Modernising these buildings will make them more appealing to the private sector and further drive down the CBD’s office vacancy rate.”
Comments attributable to Dustin May, Commercial Leasing Partner, Cygnet West:
“The declining vacancy continues to be driven by three major factors; organic growth of existing businesses, new private and public projects requiring front-end white-collar employment, and new entrants securing a footprint in the CBD market.”
“In our day-to-day leasing, we have experienced a significant number of small and medium enterprises looking to take advantage of WA’s strong economy by opening an office in the Perth CBD.
“Despite the vacancy still sitting above the long-term average, the market is fundamentally different from previous cycles, with over 30 per cent of the vacancy sitting across only seven buildings.
“A significant number of buildings performing extremely well with high occupancy rates, 59 buildings have less than 5 per cent vacancy. “Occupancy levels in the core CBD have reached an all-time high, surpassing the 2012 peak at the height of the mining boom.
“We expect occupancy in the CBD to continue to grow into the future, with new supply entering the market likely to be the only major factor that will offset an otherwise sharp decline in vacancy.”
ENDS
Notes: To provide a more accurate representation of office vacancy in the CBD, this edition of the Office Market Report includes updated boundary definitions for the Perth CBD, now aligned with Perth’s 6000 postcode boundaries. The boundary was first set in 1990, applying Australian Bureau Statistics statistical divisions.
The Perth CBD recording now excludes all assets east of Hill Street. The Stirling Street precinct, previously not reported, has been added to Perth CBD recording.
Media contact: Michael Traill | 0466 112 678 | [email protected]