- Perth CBD office vacancy rates fell from 19.9% to 16.8%
- West Perth office vacancy rates fell from 22.1% to 19.1%
- "Sharpest decline in 15 years"
Today, The Property Council of Australia (PCA) released the Office Market Report. Property punters in the West woke to a healthy local scorecard: CBD office vacancy rates had decreased to 16.8%, its lowest level since 2015.
The news comes as the Sydney office market remained resilient. PCA Acting NSW Executive Director Lauren Conceicao described the recent figures in Sydney as “encouraging”, with Sydney maintaining a vacancy rate below 10%.
Vacancy rate movements
James Phelan, CBRE Advisory and Transaction Services Office Leasing Director, spoke at the Property Council of Australia’s Office Market Report event in Perth this morning saying that vacancy rates for the Perth CBD had fallen from 19.9% to 16.8%. In West Perth, that rate fell from 22.1% to 19.1%.
“This is the sharpest decline in vacancy we’ve seen for both markets in fifteen years.”
James Phelan, CBRE Advisory
Breaking the details down, Mr Phelan said that for the Perth CBD 32% of the drop in vacancies was due to positive absorption, with 55% due to temporary building withdrawals, and the remainder being permanent withdrawals.
Mr Phelan said West Perth’s office market positive absorption was “way above historical averages.”
“Today’s vacancy rate is a continuation of a longer-term downward trend we’ve seen since 2016” Mr Phelan said.
“Whilst we have the highest CBD vacancy rate in the country, we have to remember Perth is a smaller and more volatile market, and also has the highest proportion of C and D grade stock in the country, so it’s always likely to be artificially higher than more mature markets like Sydney and Melbourne,” he said.
Some of the forecasts and fears earlier in the pandemic weren’t realised, Mr Phelan said:
“During the initial Covid period we were very concerned we would see a lot of sub-lease space hit the market, but this just never materialised.
“While this is very topical over east at the moment, it’s a non-factor in Perth.”
While the shift to the suburbs may seem to be a trend in some places, this wasn’t the case in Perth.
Over the last six months, Mr Phelan said CBRE saw more tenants have come in from the suburbs than any other period, and it didn’t seem to be a trend that is letting up any time soon.
Sandra Brewer, Executive Director Property Council WA, said the results were a vote of
confidence, not only in the office market but the WA economy more broadly. However, there is still a long way to go.
“Today’s vacancy rates are an encouraging sign for the Perth office market and the local
businesses that rely on office workers to thrive,” Ms Brewer said.
Ms Brewer also called on the government to “put their foot on the accelerator to get the city into top-gear and maintain the positive economic momentum.”
Amongst the recommendations to bring more people into the city, Ms Brewer suggested free or heavily discounted public pressure to reduce the pressure on parking costs.
As previously mentioned, vacancy figure changes were partly affected by stock coming off the market and being refreshed. This was noted as indicating renewed confidence in WA’s future growth.
“For years Perth vacancy rates have been stubbornly high as tenants have moved to new buildings as they come online, leaving older buildings with vacancies. The most recent results now show demand is starting to exceed supply and tenants are looking to existing office buildings for space.”
“A robust office market is crucial to ensuring Perth can leverage off our pandemic success and emerge from COVID-19 as a world-class business destination capable of attracting the talent, investment and the businesses needed to secure WA’s long-term success.” Ms Brewer concluded.
Disclosure: The Property Tribune was a guest of the Property Council of Australia Perth event.