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Commercial stability norm for Perth

CONTINUED stability reigns supreme across the board in the Perth commercial property market.

According to Herron Todd White managing director Garrick Smith, the CBD office market began the year on a subdued note with no major transaction consummated or being negotiated.

“This is predominantly due to the particularly buoyant market conditions over the preceding two years and the relatively narrow market segment,” he said.

“Majority of activity is likely to be in the leasing market as attractive leasing deals negotiated in the early 1990s begin to expire.

“Some growth in space is anticipated, however it is likely to be constrained by the attractive deals being offered in the abundance of B grade space.”

Suburban office demand continued to be driven by owner-occupiers and the growth of small business and consultancies resulting from downsizing and redundancies in corporate and government organisations.

In the retail sector, Mr Smith reported the CBS and prime retail properties were attracting stable levels of demand and subdued growth is expected to continue into the short term.

“Should consumer spending continue to grow into the first half of 1999, our expectations are likely to be upgraded,” he said.

The Cinema City retail/entertainment centre was recently sold by the receiver for $12.5 million, reflecting an 11 per cent return.

Other sales of note include the Raine Square Complex for $18 million and the Dianella Plaza district shopping centre for $34 million. Mr Smith said an interesting feature of this market segment had been the recent failure of strip shops to sell at auction.

“While it would be imprudent to suggest this sub-sector is running out of steam, a cautious approach to investment is recommended,” he said.

In the industrial sector, the general outlook is for continued stable demand into the medium prime properties, with yields of below 10 per cent. Speculative activity in secondary areas appears to be increasing.

Sales of note include the Southcorp site for $1 million and an 860 square metre office/warehouse, also in Belmont, for $711,000, reflecting a yield of 9 per cent.

In the residential sector, the preceding two years have shown strong levels of demand during January only to retreat to subdued sales volumes for the remainder of the year.

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