This article is from the Australian Property Journal archive
THE Perth office market’s painful journey to bottom of the market cycle appears to be over, according to CBRE.
A new supply pipeline that has propelled office vacancy has now come to completion, with an increase in tenant activity and decreased supply levels on the horizon.
“With no immediate new supply, increasing demand for CBD office space from suburban tenants, a reduction in sublease space availability, and interest from new and existing tenants looking to expand, it’s likely that vacancy rates could fall from mid-2016,” CBRE Senior director Andrew Denny said.
Looking ahead, Denny said the tranche of new supply had petered off, with no new supply now expected until 2018 with the new Woodside building.
The high vacancy rate, which has reached 21.8% in the CBD, has also prompted a wave of tenant movement, as occupiers look to take advantage of attractive incentives in the weaker environment.
“We are currently seeing a substantial increase in transaction levels, with many tenants recognising this as an ideal time to upgrade their accommodation and capitalise on the attractive terms on offer.
“With the strong flight to quality, the market will have a completely different view of prime vacancy within the next six months,” he added.
Denny said the high volume of new stock entering the market, coupled with the mining sector slowdown, had pushed Perth’s office vacancy to a national peak.
From mid-2014 to the end of 2015, Perth saw 161,206sqm of new office supply enter the market.
“With a total CBD net lettable area of 1.6 million square metres prior to this, the market saw the equivalent of an additional 10% of the entire CBD enter the market in the form of new buildings. The new supply accounted for just over half of the increased vacancy from the low of just 4.2% in mid 2012,” Denny said.
Australian Property Journal
