PERTH OFFICE MARKET OVERVIEW

The Australian office markets continue navigating through the COVID-19 pandemic. Much of the country has re-entered lockdowns, mandating work from home after a period of normalisation had come back to the economy and CBD vibrancy was (slowly) returning. The impacts on the office markets have been devastating with increases to vacancy, however some markets have benefitted from decentralization and increased business starts growing small businesses and their need for office accommodation.

For the Perth markets, the stringent border control has aided in keeping lockdowns minimal and has been instrumental in bringing the workforce back into both the CBD and West Perth markets. Robust economic growth has further stimulated some businesses need for increasing office accommodation while affordable rents have encouraged others to expand and relocated their office requirements.

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. Looking ahead, Perth is well positioned to continue this trend with both GSP and employment growth forecasts favorable, albeit strong gains in new construction and refurbishments may slow the timeframe in which full recovery may occur.

Despite elevated vacancies and effective rental rates hampered by high incentives, this has not dampened interest in investing in the Perth office markets. The relative affordability compared to the East Coast markets continues to pique the interest of both domestic and offshore investment groups looking to secure landmark assets on competitive yields. It is anticipated the spotlight will remain on WA as Australia’s economic powerhouse in the medium term which will further benefit the office markets particularly as we navigate our way through into a post COVID-19 economy.