State of the Market: Perth

It is always nice to get back to Perth and moderate the Corenet Global State of the CRE market panel for Perth. The Panellists were Alyson Martinovich of Knight Frank and Damian Stone of Y Research and the discussion focused on the Perth office market and the trends affecting occupiers.

The mood in Perth is positive and, in many ways, similar to Brisbane.

However, from a market perspective the main difference is the basket of older, C and D Grade buildings. Perth CBD has had high vacancy for years and a lot of that vacancy is in the lower grade buildings. More buildings are slowly becoming obsolete.

The PCA has even adjusted the office vacancy figures to effectively create an East Perth market to account for the older almost non-lettable buildings in that precinct. The absorption numbers below for the whole Perth Market don’t quite portray the correct picture but like any new statistical shift, it always takes a little time to realign.

The utilisation rates are similar to Brisbane; higher than Sydney and Melbourne. One prediction was Perth office occupancy will get back to pre-covid levels.

Government tenancies are part of the conversation as the government is a major tenant. But the other major sector is mining. It appears that project based space needs of the last decade are not arising with the same regularity. Overall, the sector is not taking up the same amount of space as in the past. However, the new sub sectors involving non-core minerals and renewables may create some extra demand to counter the reduction in office needs.

The general statistics for the Perth CBD office market according to the PCA are:

• Stock 1,724,763 m² or just over 6% of the total Australian Office market
• Vacancy is 14.9% of which only 0.5% is sublease
• Absorption: 6 month net absorption average in the 5 years to January 2020 was positive 9,540 m²
• Absorption: 6 month net absorption average in the 4 years since January 2020 has been negative 1,626 m² – note this figure does not quite reflect the actual absorption due to the massive withdrawal of stock due to the market realignment to the east of the CBD core

As always, the evening ended with refreshments and enthusiastic chatter about the markets. If you would like to be part of it, please join us at one of the upcoming events.