Western Australia’s office market will need 50 per cent more space to meet demand by 2020, as the ramp-up in the resources sector sends vacancy rates spiralling towards zero, new research says.
Research from ACIL Tasman prepared for property analysts Savills forecast demand for office space from WA’s resources sector to grow by 4 per cent annually, implying total demand for just over 2 million square metres in 2020.
That’s an increase of 50 per cent on current levels, Savills said.
Savills WA managing director Paul Craig said the soaring demand clearly highlighted an impending shortage of office supply.
“With an extended period of mining prosperity on the horizon in WA, underpinned by major infrastructure investment, low unemployment levels and population growth surpassing the national average, demand for prime Perth CBD office space will continue to grow and increase pressure on availability,” Mr Craig said.
“Obviously, this is great for landlords or anyone representing landlords.
“Vacancy is already low, is set to tighten further in the next 12 months and then with no new supply committed to proceed from 2014 onwards, rents should continue to climb.”
Mr Craig, however, said the news wasn’t as rosy for tenants.
“There are already limited opportunities and tenants with substantial corporate requirements will struggle to find space, and the cost of renting that space will continue to rise,” he said.
“When new opportunities do arise, tenants will have to move quickly to secure them or prepare for a bidding war.”
In the industrial sector, the ACIL Tasman report also forecast strong demand over the next decade for warehousing and storage space.
“Warehouses in Perth are an essential element in the support supply chain of almost every resource project in Western Australia,” the report said.
“The reason for this is that the only multimodal container link in the state is located in the metropolitan area.
“The resource-based market outlook suggests that demand for warehousing and storage is going to grow strongly throughout the entire period under examination.”