Extras key for Perth and West Perth business office moves

PERTH CBD and West Perth offices continue to see challenging times when it comes to the office leasing sector but businesses are looking to spaces with key extras if they are to move, according to Ray White’s latest Between the Lines* research.

“The Perth CBD Office market has endured another period of elevated vacancy,” said Ray White Commercial (WA) Director of Office Leasing Clive Norman.

“This market has been pained by vacancy levels over 18 per cent for the past four years, with a combination of reduced demand levels together with new supply completions, making any possibility of recovery for the Perth CBD slow.

“Encouragingly, the positive take-up of space recorded this year is ahead of all other CBD locations in Australia, however not enough to translate into positive movements for the effective rental market.

“Buildings that have absorbed stock this period feature quality existing fit-outs, refurbished foyers and access to additional building facilities such as casual meeting areas, end of trip facilities or inhouse café options.”

Ray White Head of Research Vanessa Rader said despite the doom and gloom of the broader state economy, the positive take-up of space recorded in the Perth CBD market over the past two and a half years had been the shining light.

“While absorption has been at a limited rate, it’s aided in the continued downward trajectory in vacancy, however it’s been heavily reliant on the movement of tenancies from outside the CBD to the CBD rather than real, organic growth in space needs,” Ms Rader said.

Mr Norman said the West Perth office market had seen a tough five years.

“Tenancy leakages to the Perth CBD has added to the overall poor performance of the West Perth market that’s seen vacancies fluctuate rapidly,” he said.

“After what appeared to be an improvement in take-up last period, the double whammy of supply re-entry and tenant losses has resulted in a sizeable increase in vacancy.

“That being said, there are some tenants that will always choose West Perth over the CBD and they’re the heartbeat of that region.

“The current market represents good opportunities for tenants looking at West Perth to secure attractive terms.

“West Perth has historically been popular with some tenant types seeking high car parking ratios and more affordable rents.

“The lure of quality end of trip facilities, fitted out suites, refurbished entrance foyers and greater local amenity choices with coffee shops and restaurants on the doorstep all have added to the appeal of a move into the CBD.

“While parking is important to many occupiers, the broader workforce appreciate the proximity to rail and bus, saving high parking costs for employees.

“There are early signs of renewed interest that aren’t quite translating into deals but the flight to quality does equally apply to West Perth, so Llandlords should look at building facility upgrades where feasible.”

*Ray White Between the Lines Commercial Research – Perth CBD and West Perth Office Leasing Overview – August 2019.