Perth office market demand weakest in 20 years
Perth has recorded its weakest office market demand in two decades, with the CBD’s vacancy rate hitting double figures.
The Property Council of Australia’s latest Office Market Report found that the office vacancy rate for the Perth CBD was 11.8 per cent in July 2014, up from 9.0 per cent in January 2014.
The Office Market Report is the most reliable, independent measure of office vacancy rates in Australia.
The Perth CBD recorded a sublease vacancy over 40,000sqm, more than double its historical average.
The report also revealed that the vacancy rate of secondary stock in the Perth CBD is nearly 30 per cent, more than three times that of the prime vacancy.
“The Perth CBD has the weakest demand in the country. However, Brisbane, Adelaide and Canberra have a higher vacancy, while only Melbourne and Sydney recorded a decline in vacancy over the last six months,” said Property Council of Australia Executive Director Joe Lenzo.
“What we are seeing in Perth is a ‘flight-to-quality’. Tenants of secondary stock are taking space in premium-grade buildings, which are maintaining a low vacancy rate of 3.9%.
“With around 75% of CBD stock greater than 20 years old, this is the perfect time to refurbish and revitalise office buildings or find alternative uses that are in higher demand for those spaces, such as hotels or residential.
“The office market in West Perth is tracking well, with an almost negligible increase to its vacancy rate. This is consistent with what was seen nation-wide over the last six months, with overall demand negative in the Australian CBD and positive in the non-CBD.
“There will be a spike in new CBD office space supply in late 2015, with 148,000sqm expected to come on stream. Owners of ageing buildings need to make sure they are taking steps in order to remain competitive and keep their spaces occupied.”
Key market indicators, Perth CBD (aggregate)
| Grade | Vacancy, Jul 14 (%) | Vacancy, Jan 14 (%) | Net absorption, 6 months to Jul 14 (sqm) | Net absorption, 12 months to Jul 14 (sqm) |
| Premium | 3.9 | 1.4 | -6,140 | -3,795 |
| A | 12.7 | 10.2 | -12,360 | -33,656 |
| B | 13.1 | 11.3 | -6,818 | -16,143 |
| C | 16.3 | 12.3 | -7,297 | -12,355 |
| Total | 11.8 | 9.0 | -36,688 | -70,626 |
Key market indicators, West Perth (aggregate)
| Grade | Vacancy, Jul 14 (%) | Vacancy, Jan 14 (%) | Net absorption, 6 months to Jul 14 (sqm) | Net absorption, 12 months to Jul 14 (sqm) |
| A | 5.8 | 5.5 | -397 | -861 |
| B | 13.0 | 11.2 | -835 | -686 |
| C | 7.5 | 10.4 | 2,737 | 1,459 |
| D | 7.7 | 11.3 | 544 | 271 |
| Total | 9.2 | 9.2 | 2,049 | 183 |
Media contact
Joe Lenzo
WA Executive Director
08 9426 1200 or 0419 044 768
John Nguyen
National Research Manager
02 9033 1943 or 0410 449 210
For more information, visit www.propertyoz.com.au/officemarketreport