Thursday, 2 February 2023
MEDIA RELEASE
Positive demand continues to drive CBD office vacancy lower.
Perth's office market remains robust, with the latest Property Council of Australia data revealing the CBD vacancy rate is now 15.6 per cent, a 0.2 per cent improvement.
Property Council WA Executive Director Sandra Brewer said while the improvement seems modest, the results in the Office Market Report are a strong indicator of underlying market resilience as an additional 13,788sqm space was added to the market in the reporting period.
"Both the Perth and West Perth markets are showing strong signs of improvement," Ms Brewer said.
"Even with businesses adapting to hybrid workforce arrangements, what we are seeing is that the role of the office remains central to the employee experience.
"Contrary to many predictions, flexibility does not appear to be reducing demand for space. Sublease vacancy rates - often an indicator of businesses downsizing space requirements - remain low at 0.6 per cent, well below the historical average of 1.7 per cent, indicating businesses are using their whole of office space.
"We are seeing a shift from desk dominant office space, with tenants increasingly requiring more room for a superior office experience, with additions such as wellness rooms, collaboration spaces, lounges for socialising and sophisticated coffee machines," she said.
There are more encouraging indicators that vacancy will continue to trend downwards, with strong enquiry levels reported by commercial property agents towards the end of 2022 and the start of 2023.
Colliers State Chief Executive for Western Australia Richard Cash said the positive results of the Office Market report would set the tone for a strong start to 2023 in both the Perth CBD and West Perth office markets.
"The high level of business confidence in WA is another positive sign for the broader WA economy in 2023, with national and multinational companies seeing the clear benefits in having their Australian headquarters located in Western Australia," Mr Cash said.
Another promising sign is the high levels of pre-committed leasing for new projects due to be completed in coming years.
"Property Council Members in Perth expect to complete several new office towers before 2024 of which 53 per cent of the space is already pre-committed," Ms Brewer said.
"The West Perth office market has also seen another significant improvement with a 2.1 per cent decline in vacancy, one of the strongest improvements in recorded markets nationally.
"Late last year we saw office occupancy rates return to 80 per cent of pre-COVID levels, which represented a victory for the many stakeholders who encouraged the recovery of Perth's CBD following the pandemic.
"Maintaining momentum for working in CBD offices will continue to drive demand for space over the long term," Ms Brewer concluded.
