Western Australia’s stringent border control and minimal lockdowns have been instrumental in bringing the workforce back to Perth’s CBD and West Perth, boosting the city’s office markets.
Ray White Commercial head of research Vanessa Rader said the swift increase in take up recorded in both Perth markets in the first half of 2021 has bucked the trend of many other CBD and non-CBD office markets around the country, resulting in vacancy improvements and a revisit of the positive trajectory trending prior to the pandemic.
“The last 18 months has resulted in an uptick in vacancies across most office markets across Australia, as businesses struggled with the continued rental costs despite staff working from home, which was enforced due to lockdowns,” Ms Rader said.
“For the Perth markets, the relatively stringent border policies have kept COVID-19 levels low and the workforce in the office.
“This has resulted in both Perth CBD and West Perth recording some of the best absorption levels in the country, improving on the high vacancies which had been previously recorded.
“Perth CBD has recorded the third greatest uptake of all CBD’s behind the robust Canberra market and Sydney CBD (despite continued vacancy increases).
“While West Perth is also ranked third of the non-CBD markets behind the strong performing Queensland sub-markets, Brisbane Fringe and Gold Coast.”
Flight to quality is continuing across the Perth markets with vacancy rates decreasing for A, B, and C grade stock, while vacancy rates for D-grade stock increase.
B-grade stock recorded the greatest improvement, down 5.4 percentage points to 23.3 per cent, while A and C-grade fell to 17.3 per cent and 17.9 per cent respectively.
Premium stock currently sits at 7.1 per cent, while vacancy rates for D-grade stock increased 8.4 percentage points to 25.1 per cent.
Absorption for the last six months was recorded at 19,697sqm due to a combination of new and expanding tenancies notably from professional services tenants.
This has resulted in total vacancies now representing 295,394sqm, which is the first time vacancies have been under 300,000sqm since 2015 when vacancy rates hit 16.8 per cent.
Ray White Commercial WA associate director office leasing Sallese Wilmot-Barr said enquiry level had been really positive with confidence returning to the market.
“Offices with full refurbishment, upgraded services and facilities, and certainly still offices with speculative fitouts have been in the highest demand in the CBD and immediate fringe areas, within the higher quality range,” Ms Wilmot-Barr said.
“Demand is being driven by the confidence of tenants to move forward with finding new office space instead of short term extensions or renewals that were common at the beginning of the Covid uncertainty.
“Perth is also driven largely by the resource industry and related services, so positivity in those areas tends to flow on.”
Ms Wilmot-Barr said the challenge for both businesses was finding a space which could accommodate staff who were balancing time in the office with working from home.
“Perth is in a very lucky position in terms of having a low amount of days in lockdown, and ability to control the spread of Covid, which means generally business as usual can occur,” she said.
“However, there is still the working from home element that means that although a lot of staff have flexible time in the office and working from home, but there is still a need to accommodate if all staff attend on one day.
“This just means there needs to be an adjustment on space planning and how fitouts look now.”
HI-RES IMAGES AND REPORT
Media contacts:
Vanessa Rader
Head of research
Ray White Commercial
0432 652 115
vrader@raywhite.com
Sallese Wilmot-Barr
Associate director office leasing
Ray White Commercial WA
0419 905 991
sallese.wilmot-barr@raywhite.com
Cassandra Glover
Media advisor
Ray White Group
0447 000 472
cglover@raywhite.com
