- Formal Tenant Representatives, indicator of future office demand, rose in March,
- Positive net absorption of 14,200 sqm was recorded across the CBD office markets during Q122
- Mining driving the demand, along with other sectors such as IT and professional services
Research undertaken by JLL has reported an increase in office leasing activity during the first quarter of this year.
Future office demand expectations are firmly rising, with Formal Tenant Representations brief are 17% higher as of March 2022 versus the same time last year.
Positive net absorption of 14,200 sqm was recorded across all CBD office markets during the quarter. Perth CBD recorded 9,300 sqm – the strongest result since the fourth quarter of 2018.
“There are no signs of stopping WA’s economic growth momentum with major indicators pointing upwards for some time now,” said Ronak Bhimjiani, JLL Director – Research.
Mr Bhimjiani noted the mining sector’s share of WA’s economic output has increased from 35% in 2015 to 42% last year, which has coincided with the industry being the largest occupier of space in the Perth CBD.
“The value proposition of WA has been boosted significantly since the on-set of the COVID-19 pandemic, with the mining sector playing a key role in driving economic growth.
“JLL Research’s analysis of company accounts shows that the major iron producers cost of production is in the region of USD 31-48/Tn, a level that is significantly lower than the current iron ore spot price of USD 134/Tn.”
“With company revenues and earnings on the up given the large spread between the cost of production and current spot price, it is no surprise to see this translate into buoyant CBD office market conditions.”
Not just mining
Nick Van Helden, JLL’s Head of Office Leasing – WA, added the overall increase in activity is an encouraging sign, and noted this demand includes sectors beyond resources.
The Top three industry sectors that contributed towards overall net absorption included the professional services, mining and IT sectors,” said Mr Van Helden.
“Furthermore, we are seeing additional enquiries from mining sector tenants looking to expand operations, while the financial sector is also active in the current market.”
JLL’s Managing Director in WA, Angelo Amara, said upon analysisng deal activity within their own business during the quarter, the Perth CBD recorded 14% of national deal activity – even though WA only makes up about 10% of both the Australian population and economic output.
“It is pleasing to see deal activity trend above WA’s share of national economic output. This shows the momentum that is occurring in the Perth CBD office market, despite the WA border having remained closed for the large part of 1Q22.
With the WA border now having re-opened, we are expecting to see further upside in office leasing demand.”
