PERTH OFFICE MARKET OVERVIEW

March 2022

The Perth office markets have been one of the best performers across Australian office markets. For CBD’s, Perth has led the charge recording the highest annual net absorption for 2021 calendar year at 67,550sqm however remembering that this market is only 34% the size of a Sydney or Melbourne CBD. This huge take up has been across the city and size ranges with demand coming from a mix of professional services both new and growing businesses. Perth’s rigid border controls has allowed the office markets to continue working at full force with lockdowns and working from home only tales heard from the East Coast.

While other markets grapple with getting their staff back into physical office space, the Perth market and its economy continue to grow resulting in unemployment of just 4.2% the lowest rate on record for over ten years. West Perth has also seen a push by smaller businesses with positive take up also recorded, again one of the top 3 nationally for demand behind the much larger Brisbane Fringe and popular coastal Sunshine Coast market.

While vacancy had recorded a prolonged high, it will take some time for this demand to filter through across the rental market. Continued choice available for tenants and competition amongst regions has ensured that rents remain static and incentives continue to be a feature in the short to medium term.

However, these indicators have not gone unnoticed by investor groups, now converging on the Perth market looking to capitalize on attractive yields compared to other East Coast options. Buyers across all size ranges have a renewed confidence in the Perth market with smaller options attractive to local and interstate private groups while the larger end of town continues to be actively pursued by both domestic and international funds, REITs and other investment vehicles.

The future is looking brighter for the Perth office market; however, the depth of potential supply will be a stumbling block if it continues speculatively. The need for a considered addition of stock into the marketplace will ensure the trend of vacancy improvement continues which will benefit landlords with rents and capital values.