Available office space at 25-year low

Just 10,000 square metres of office space is available across the CBD and West Perth, according to new figures from the Property Council of Australia (WA), ensuring there will be keen demand for the four new office towers being developed in Perth.

The data shows West Perth’s vacancy rate in the commercial office market is the lowest recorded in 25 years, at 0.4 per cent.

This translates to just 1,502sq m of available space in the area.

Perth CBD also recorded a lower vacancy rate, of 0.7 per cent, down from 0.9 per cent in January. A mere 8,873sq m of space is available in the city, with Perth CBD having the lowest vacancy rate of any capital city.

As evidenced by the data, demand in the first six months of 2007 was only limited by a lack of supply, with a net absorption in the CBD of 8,651sq m, and 2,641sq m in West Perth.

PCA WA executive director Joe Lenzo said the options for businesses looking for new premises were extremely limited, with only 20 buildings having vacancies in both the CBD and West Perth.

The largest available space is less than 1,000sq m.

Mr Lenzo said rising rents and supply shortages were forcing companies into leasing in areas such as Subiaco and Herdsman.

“Newmont Mining’s recent move to the Colonnade in Subiaco is a prime example of this trend,” he said.

Resources companies and mining services firms continued to drive demand, Mr Lenzo said, with both Rio Tinto and Worley Parsons taking extra space in the past six months.

He said businesses were being more resourceful due to the tight market, adopting open-plan fit-outs and converting meeting rooms into work spaces.

No premium space remains available in the CBD, and the area’s A-grade stock is less than one fifth of the total available, at 1,252sq m.

About 85 per cent of stock is B-grade or C-grade, which is not suitable for blue chip tenants.

A total of 9,979sq m of new stock is scheduled to come online in West Perth in the second half of 2007, and a further 4,950sq m is to be completed in the area next year.

However, nearly three-quarters of this space is already pre-committed, and the remainder will not be sufficient to meet demand based on the current vacancy rate and net absorption figures.