Demand for Perth Fringe Office Strata Market Stable
Demand for office strata in the Perth fringe market while down on prior years is performing better than the overall Perth CBD market, according to research by Ray White Commercial.
Ray White Commercial Head of Research, Vanessa Rader, said the fringe market, which includes East Perth and West Perth, recorded $21.04 million in sales in 2015.
“This is slightly down on the 2014 result yet still well below the highs achieved during the peak of 2007 when $37.29 million change hands,” Ms Rader said in her Between the Lines Perth Office Market Overview May 2016 report.
“This latest result represents 29 transactions with an average size of 160 sqm. The bulk of sales also include parking facilities.”
Vanessa Rader said the encouraging demand for strata office space has come from private investors with self-managed super funds still contributing to a high volume of sales despite failing market conditions.
“The poor performance of the residential market across Perth could be fuelling this move into commercial property to diversify risk, particularly given its lower price point,” she said.
“About half of all transactions are in the sub $500,000 price bracket and 30 per cent are in the sub $250,000 price bracket.”
Ray White Commercial WA Sales and Leasing Manager Stephen Harrison said despite these stable levels of demand for strata stock, capital values have still seen some compression.
“During 2015 the average value was recorded at $4,249 per sqm, representing a 3.49 per cent decline compared to 2014 results,” he said.
“However the average results for the past three years have been reasonably consistent, albeit well behind the highs achieved during 2008 after the high volume turnover of the previous year.
“In 2008, recorded capital values were in the region of $7,378 per sqm, which was approximately 25 per cent more than Sydney CBD strata office market of the same time and nearly double that achieved in the Brisbane CBD strata office market.”
“The road to recovery for the Perth fringe strata office market is expected to be long with the recovery in the broader freehold market needing to lead the charge. Capital value recovery back to the highs of the market peak is not foreseeable in the short to medium term.”