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

/Public Release. View in full here.