THE Perth CBD office leasing market is heating up, with top-tier tenants beginning to hunt out new space and upgrade their premises after the recovery of business conditions.
THE Perth CBD office leasing market is heating up, with top-tier tenants beginning to hunt out new space and upgrade their premises after the recovery of business conditions.
Industry research by analysts Colliers International showed the first half of the year saw the Perth market register a sharp increase in net absorption thanks largely to a ‘breathe out’ factor – where tenants soaked up additional space in existing buildings, as expansion plans put on hold during the global financial crisis were reinstated.
The Colliers report found leasing activity had undergone a distinct shift, with large tenants actively looking for new space.
“As you’d expect, the resources companies are leading the charge in this area, and their moves are primarily aimed at accommodating growth as projects like Gorgon gear up,” Colliers International research consultancy manager Erwin Edlinger said.
“There is a fair bit of activity in that sector at the moment, and we’ll probably start to see the results of those moves in the coming months.”
Mr Edlinger said Chevron was a prime example, having moved into its new premises at Dynon’s Plaza, where they are the sole tenant, and was currently looking at a number of other options to accommodate ongoing growth.
“We are also seeing a number of office tenants seeking to take advantage of the current market conditions to upgrade their premises and make the move into an A-Grade or even Premium building, so that flight to quality we’ve been anticipating is in full swing,” Mr Edlinger said.
“Building owners are also very aware of that market dynamic, so there are a lot of refurbishments and upgrades going on in the CBD.”
Leasing enquiry level analysis by Jones Lang LaSalle also showed the Perth market continued to follow the booming resources sector, with lease enquiries up 26 per cent on the previous year.
The latest figures from the Property Council of Australia showed the official Perth CBD vacancy rate at 9.89 per cent in July, largely on the back of new supply delivered to market from newly completed developments.
But Colliers International director of office leasing Neil Kidd said there were effectively two markets emerging in Perth’s CBD.
“What we’re seeing is effectively a two-tier market with a vacancy rate of between 6 and 7 per cent at the city’s west end and a rate of somewhere between 12 and 24 per cent at the eastern end,” Mr Kidd said.
“That reinforces both the fact that tenants are seeking out quality when they’re looking for premises, and the difference in office accommodations between the east and west ends of the city.”
