- JLL Research suggests multiple factors could lead to a 15% vacancy rate
- Prime grade stock will leave market, and unlettable space is not considered
- Increased leasing will also weigh on the figures
Data from JLL Research, this month, suggests Perth vacancy rates could be on their way down.
“JLL Research is expecting a reduction in the Perth CBD office market vacancy rate based on early evidence in 2Q21.”
The company said the movement is a combination of factors, including increased leasing activity, and withdrawals.
Four A-Grade buildings, approximately 40,000 square metres, are leaving the market to commence refurbishment and redevelopment.
JLL said “1 Mill Street is anticipated to be demolished in the next 4 weeks pending redevelopment, while 905 Hay Street and 26 St Georges Terrace are withdrawn for major refurbishment. 168 St Georges Terrace will also see majority of the floors withdrawn due to refurbishment.”
“JLL Research expect these withdrawals to reduce the vacancy rate to approximately 18%.”
After excluding “several C & D Grade assets [that] are unlettable in their current condition,” JLL’s Ronak Bhimjiani said:
“The “real” office CBD vacancy rate is much lower at 15.0%”
Ronak Bhimjiani, WA Manager of Strategic Research, JLL Research
Mr Bhimjiani defined unlettable as “any building with a static vacancy of longer than 36 months. i.e. no leasing deals have been concluded in this time period clearly indicating the tenant market does not regard these assets/space as viable options.”
Perth CBD Vacancy Rate by Grade
How this plays out no doubt be interesting, as available capital and investor interest in office assets remain high.
This week, Centuria spent $224 million on an office property in Footscray, a stone’s throw from Melbourne’s CBD, and today Growthpoint Property acquired a $52 million office block in Sydney Olympic Park.