Perth office market vacancy falls steadily

The Property Council’s July 2019 Office Market Report has revealed a slight decrease in overall vacancy for the fifth consecutive period.

The overall vacancy rate for the six months to July 2019 was 18.4 per cent, marginally lower than the 18.5 per cent recorded in January, due to 15,923sqm of net absorption, the best result since July 2015’s 16.6 per cent vacancy. 

Positive demand was concentrated in the Premium and B-grade segments, where absorption for the six months to July was 20,417sqm and 8,474sqm respectively.

Dexus’ 240 St Georges Terrace was one of Perth’s best performers in the half. The 46,900 sqm building, officially vacated by Woodside in December, has secured a long list of tenants, including Macquarie, Wood, Worley, Illuka Resources, HWL Ebsworth, BP, Nous Group, CBH Group, which now account for 43,000sqm for a 92.5 per cent occupancy. 

“This demonstrates there are opportunities despite the challenges facing landlords in central Perth,” Property Council WA Executive Director Sandra Brewer said.

“Landlords have been working overtime to offer outstanding leasing deals and incentives to attract and retain tenants.”

“Our industry needs action on City of Perth’s parking allocation policies for refurbished buildings. We hear stories from many office building owners who would love to upgrade buildings but are frustrated by planning red tape.

“There is a significant opportunity here to encourage owners and occupiers to invest and activate under-utilised CBD buildings but it also needs to be encouraged through well considered policy settings.

“The State Government needs to take action now to eliminate tax and planning impediments to job-generating property projects,” she said. 

Vacancy in West Perth rose in the six months to July 2019, from 14.8 per cent to 16.9 per cent.

A moderate fall in West Perth A-grade vacancy, at 11.2 per cent in July from 11.5 per cent in January, was offset by a marked rise in B-grade vacancies, with an extra 9,794sqm of space becoming vacant over the first half of 2019.

However, Ms Brewer noted the West Perth situation demonstrated significant opportunities to sign-up for high-quality refurbished space in the suburb.

 

To view select Office Market Report data series, visit the Property Council’s Data Room

Media contact: Property Council WA executive director Sandra Brewer | M 0418 1 030| E [email protected]

 

Analysis – Perth CBD market

Points to note:

• The Perth CBD office market vacancy decreased over the six months to July 2019
• This was due to positive demand
• All grades of space have double digit vacancy with the exception of the Premium segment
• The positive demand was concentrated in the Premium and B Grade segments
• There is some space in the pipeline over the short to medium term

 

Vacancy analysis:

• Total vacancy in the Perth CBD market decreased from 18.5 percent to 18.4 percent
• This was due to 15,923sqm of net absorption
• 39,745sqm of space was added over the period and 23,155sqm was withdrawn
• The positive demand was concentrated in the Premium and B Grade segments
• All grades of space have double digit vacancy with the exception of the Premium segment

 

Future supply:

• 29,045sqm is due to come online in the second half of 2019
• This will be followed by 12,047sqm of space in 2020
• 54,000sqm is in the pipeline for delivery from 2021 onwards
• 110,632sqm of space is mooted

 

Key market indicators, Perth CBD 

 

Grade	Vacancy, Jul 2019 (%)	Vacancy, Jan 2019 (%)	Net absorption, 6 months to Jul 2019 (sqm)	Net absorption, 12 months to Jul 2019 (sqm)
Premium	8.1	3.8	20,417	22,421
A	18.5	17.5	-9,933	-8,142
B	26.9	30.2	8,474	12,038
C	18.7	21.1	-3,035	-4,086
D	13.0	13.0	0	444
Total	18.4	18.5	15,923	22,675

 

 

Analysis – West Perth market

Points to note:

• Vacancy in West Perth increased in the six months to July 2019
• This was mainly due to negative demand
• All grades of space recorded vacancy above 11 percent
• Only the A Grade segment recorded positive demand
• There is no space in the pipeline over the short to medium term

 

Vacancy analysis:

• Total vacancy in West Perth increased from 14.8 percent to 16.9 percent
• The increase was due to -7,288sqm of net absorption and 3,059sqm of supply additions
• 1,392sqm of space was withdrawn over the period
• All grades of space recorded vacancy above 11 percent
• Only the A Grade segment recorded positive demand

 

Future supply:

• There is no space in the pipeline over the short to medium term
• 1,414sqm is mooted

 

Key market indicators, West Perth (aggregate)

Grade	Vacancy, Jul 19 (%)	Vacancy, Jan 19 (%)	Net absorption, 6 months to Jul 19 (sqm)	Net absorption, 12 months to Jul 19 (sqm)
A	11.2	11.5	454	6,153
B	19.1	13.7	-7,295	-7,720
C	19.9	20.5	-35	-238
D	24.7	21.7	-412	-235
Total	16.9	14.8	-7,288	-2,040