Office rents are soaring in the Perth CBD, particularly for A-grade stock, with the vacancy rate falling to the lowest in Australia, new research from Jones Lang LaSalle says.
Jones Lang LaSalle managing director John Williams said the vacancy rate in the CBD has dropped to just 3.2 per cent at the end of September, after being 5.4 per cent at the end of June.
The national office vacancy rate stands at 7.4 per cent.
“Perth’s CBD office market is now critically under-supplied and is at its lowest level since December 2008,” Mr Williams said.
“Furthermore, West Perth has the nation’s second tightest market with just 3.3 per cent of properties vacant.”
Mr Williams said a 16,400 square metres of office space was taken up over the September quarter, taking the net absorption for the year to date to 43,900sqm, nearly twice the annual average.
He said the 46,900sqm of office space available in the CBD was 23 per cent less than the 60,700sqm of net absorption recorded over the last 12 months.
“The take-up of office space over the last 12 months has exceeded supply by a staggering 238 per cent,” Mr Williams said.
The undersupply is having a “serious impact” on rents, which spiked by 8.3 per cent in the three months to October across all grades of office stock.
Jones Lang LaSalle’s research showed a 20.4 per cent increase in the A-grade office market over the past 12 months, with rents now averaging $749/sqm.
B-grade office stock was also highly sought after, with rental growth reaching 17.4 per cent, and secondary rents now at $518/sqm.
“Developments currently under construction will solve neither the vacancy rate nor the rental escalation situation,” Mr Williams said.
“These projects are 91 per cent pre-committed. Similarly the backfill created by Bankwest, BHP and the government relocating to new buildings in 2012 and 2013 may not fully satisfy tenants’ appetites.
“Our research indicates that only circa 60,000sqm of this backfill remains available and this is being taken up weekly.”
