Companies in line for an office rent review early next year are in for a shock, with premium CBD office rents tipped to rise to as much as $650 a square metre.
Companies in line for an office rent review early next year are in for a shock, with premium CBD office rents tipped to rise to as much as $650 a square metre.
Perth’s record low vacancy rate of 0.9 per cent won’t help matters, with less than 11,542sq m of office space left and no significant new stock expected to come onto market within the next two years.
Jones Lang LaSalle national director advisory, Graham Kennedy, said some premium rents now in place were above $550sq m, and this would almost certainly hit $600sq m by December.
Tenants could be forced to pay as much as $650/sq m plus outgoings into the early part of 2008, Mr Kennedy said.
“I don’t believe there will be any new buildings available until at least early 2009. From start to finish these major office projects take three years,” he told WA Business News.
Perth shouldered a 50 per cent increase in premium rents last year, however this spike is widely considered to be unsustainable.
Mr Kennedy believes rents will moderate slightly during 2009 to more normal levels of between 8 per cent and 10 per cent.
Perth gross face office rents are currently the second highest in the country behind Sydney, with average premium rents in Perth at $594/sq m and A-grade at $516/sq m.
Relative bargains can still be had in Melbourne, however, as the southern capital continues to fall behind Perth. Premium offices in Melbourne are now leasing for an average $468/sq m and A-grade space for $403/sq m.
Sydney still leads the country, with premium office rents averaging a staggering $958/sq m and A-grade $648/sq m.
The only relief in sight in Perth this year is for smaller tenants, who may still be able to fight for what is left of the refurbished space coming back into supply.
Colliers International research estimates about 35,000 sq m of refurbished space will come back online in 2007, although a high proportion is known to be pre-committed.
Buildings subject to refurbishment this year include the former RAC building at 228 Adelaide Terrace, which is already pre-committed by Synergy, the Alexander Centre at 95 St Georges Terrace, with 6,600sq m available mid-year, and the GPO building, which has 4,800sq m of space remaining after Maunsell Engineers signed on for 6,200sq m last year.
Up to 10,614sq m of space will come back into supply in coming weeks at International House at 26 St Georges Terrace, including 400sq m of retail.
And the former Royal & Sun Alliance building at 41-43 St Georges Terrace will have 2,800sq m and 100sq m of retail by the end of the year.