This article is from the Australian Property Journal archive
THE Perth CBD office market vacancy rate has tightened significantly from 7.8% in July to 2.8% in September as demand from the resources sector goes into overdrive, according to Savills.
The significant drop in available space is highlighted in Savills Prime Full Floor Availability Report which is now at its lowest level in two years.
And to cement Perth as the mining capital city of Australia, Savills’ WA managing director Paul Craig said the state’s resources sector now accounts for more than half of the city’s leasing profile.
“WA is now entering an extended period of mining prosperity, evidenced by US energy giant Chevron recently giving the green light to its final investment decision on the $29 billion Wheatstone LNG project.
“The mining, utilities and industry sector now accounts for 55% of the Perth CBD office leasing profile. With over $170 billion worth of resources projects planned or pipelined for WA, many mining companies are looking for space to expand as their businesses grow,” he added.
Craig said this emerging period of mining prosperity in WA is expected to have the longevity unlike what we have seen previously.
“It has the potential to continue for another two decades and readjust the entire WA economy at a higher level,” he predicted.
Craig said the outlook for WA is extremely bright despite the economic uncertainties in the United States and Europe.
“We are now seeing a significant increase in investment interest in the WA commercial property sector.
“Given the longevity of the state’s new mining projects and associated infrastructure, and the lack of new Perth CBD office supply, investors are recognising it is an ideal opportunity to enter the WA market,” he added.
Office leasing divisional director Graham Postma said Savills’ latest analysis shows availability is tighter than many think, and it will continue to tighten and rents will continue to increase as a result.
“We have seen a distinct increase in transactions being concluded in the last 4-6 weeks. By way of example, Savills has agreed terms over some 5,000 sqm in Allendale Square in the past fortnight with almost all of this space representing net absorption, with little or no backfill opportunities resulting,”
Savills research shows there are 66 full floors available for lease (now and in the future) in the Perth CBD as at September 2011, representing 6.7% of the city’s prime office stock.
Of this, only 18 floors are available for occupation in the next six months, primarily comprising the sub-lease space available in BankWest Tower, 108 St Georges Terrace and Raine Square which is due for completion later this year.
The number of full floors available has fallen from 93 floors in June and has consistently tightened from the peak level of 128 floors in September 2009.
Following the completion of City Square and Raine Square, there is only one new development, being Charter Hall’s ‘WorkZone’ development, which has been pre-committed by Leighton.
The project is due for completion in August 2013 and only 6,450 sqm remains available for lease.
Australian Property Journal
