- 122,250 jobs have been added to WA economy since May 2020
- Gross volume square metreage leases across Perth has doubled compared to last year
- Perth prime office market yields remain higher than Sydney and Melbourne
With a strong performing economy and a well-versed Covid management plan, the improving office market has placed Perth on the map among domestic and foreign investors, a new CBRE report has revealed.
According to the report, since June 2020, $5.1 billion in capital has been actively vying for around $740 million worth of office assets in the Western Australian capital.
CBRE’s WA Head of Capital Markets, Aaron Desange, said that despite the elongated transaction processes and delays caused by Australia-wide lockdowns, appetite for investment opportunities has rebounded to buoyant levels.
“Given the current economic fundamentals at play, investors have taken notice of the Perth market and future long-term growth potential, proven by the level of engagement in recent sales campaigns,” Mr Desange explained.
“While capital is out there, it is still selective in nature, with income certainty of the highest importance given investment predictability and more favourable funding terms.”
Aaron Desange, CBRE
The CBRE data noted that 122,250 jobs have been added to the state economy since May 2020, which it argued had flown to the office market.
Across 45 leasing deals (500-plus square metres) this year, Perth has witnessed about 59,350sqm in gross volume – double the figures seen in 2020.
Nicholas Volk, of CBRE Associate Capital Markets, said the favourable physical office occupancy levels had facilitated new leasing deals.
“Investors have placed value on assets which have proven successful in attracting tenants and in generating leasing momentum given they are able to underwrite their acquisitions with conviction and confidently deploy capital,” said Mr Volk.
The analysis came as the Property Council of Australia recently released their Office Market report, which revealed the Perth CBD office vacancy rate is the lowest in six years.
As of June, Perth prime office market yields were 6.26% – higher than the 4.59% and 4.74% recorded in Sydney and Melbourne respectively.
“Given an attractive yield premium for prime Perth office assets and $4.3 billion in unsatisfied capital, we expect demand for the right opportunities to continue rising,” Mr Volk concluded.