Perth’s office vacancy rate has hit 14.8 per cent, as widely predicted, the highest level reached in almost 20 years.
The Property Council of Australia today released its Office Market Report, which showed office vacancies at the end of January had risen to nearly 15 per cent, up from 11.8 per cent in July last year.
Premium grade buildings were the only office category to record a vacancy in the single digits, at 8.5 per cent, but that was almost double the previous rate in July, Property Council WA executive director Joe Lenzo said.
“The office market in Perth is the barometer for the state’s economy,” Mr Lenzo said.
“The lack of demand is a reflection of WA’s economic performance.
“At the same time, we are undergoing a spike in CBD office stock with 149,601 square metres due to come online in 2015.”
In the CBD, most grades of office building have a vacancy rate in the mid teens, with the exception of D grade buildings at 49.8 per cent.
The vacancy rate in West Perth is a lttle better than the CBD at 10.9 per cent, with A grade buidings at just 6.8 per cent, helped no doubt by the lack of new supply.
Despite the blowout, Mr Lenzo said long-term optimism remained in the market with the commercial sector expected to stabilise in coming years.
However, late last year BIS Shrapnel said it expected the vacancy rate to blow out to 23 per cent in 2018, well exceeding most commercial agencies forecasts.
JLL is expecting the vacancy rate to peak at 16 per cent next year.
Despite the doom and gloom surrounding the rise of empty space, the city's biggest office landlord, Brookfield Office Properties, is expecting a rebound over the next 12 months, as reported late last year by Business News.