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Low vacancies force rents up

WITH office vacancy levels in premium locations at a 20-year low, CBD businesses have been left with the option of paying up or moving out.

There is only a total office space of 5000sqm left in the four premium buildings and property consultants predict a rent rise as competition for the prestigious locations increases.

This has had a flow-on effect, with rents for A-grade office space also rising, according to Colliers Jardine research manager David Cresp.

“There are no large areas of continuous floor space in the premium buildings,” Mr Cresp said.

“This is starting to put pressure on A-grade buildings.”

The completion of the Woodside building in 2002 is not expected to ease the pressure – although it has a total of 46,000sqm, only 10,500sqm will be available for rent.

In the past year, premium rates have climbed to $310sqm and are expected to continue increasing.

Chestertons International agency director Ian Mickle said rents would have to hit at least $350sqm before a sixth premium building became economically viable.

The Woodside building had already taken rent pre-commitments at $360sqm, but Mr Mickle said while this created market evidence of a higher rate, it would take about three years for other premium building rents to reach that point.

In the meantime, the rising rents could start to force businesses to reassess their location, Mr Mickle said.

Mr Cresp agreed and noted some businesses had already moved.

“Businesses in premium locations have no options to expand,” he said.

“Over a period of time they will start to look at alternative office locations.

“Subiaco is becoming more attractive and is seen as a good alternative to the CBD and West Perth.

“Mining companies have started looking at Belmont, out on the Great Eastern Highway.”

Adelaide Terrace, East Perth, Joondalup, Fremantle and Victoria Park were also suggested as possible areas for office growth.

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