Perth CBD the weakest office market: JLL

Perth now has the highest vacancy rate of any office market across capital cities in Australia, according to fresh research by JLL, with 16.6 per cent of commercial space in the CBD sitting empty.

JLL said Perth was the only capital city market to record negative net absorption in the first quarter of 2015, with 11,900 square metres of vacant office space being added to the market.

However, significant leasing deals that did occur over the quarter include: JDSI Consulting Engineers taking up 1,950sqm at 1 Nash Street; VIX Consulting sub-leasing 1,300sqm at 40 St Georges Terrace; EBM Insurance leasing 1,250sqm at 1162 Hay Street; Samsung C&T moving into 1,000sqm at 15 Rheola Street; and Slater & Gordon taking up 1,500sqm at 32 St Georges Terrace.

JLL head of office leasing WA, Nick Van Helden, said there were also a number of larger details awaiting documentation, with strong enquiry levels due to attractive terms available to potential tenants.

“But the deals done in the first quarter were predominantly relocations rather than net absorption or tenant expansion,” he said.

JLL’s national director of research, Andrew Ballantyne, said he expected further merger and acquisition activity in the resources sector over the rest of 2015 following a downward shift in commodity prices.

“While this activity will stimulate movement in the market, the Perth leasing market will remain challenging and we expect vacancy will rise further over the latter part of 2015,” he said.

Nationally, the CBD office market vacancy rate contracted by 0.4 per cent in the first three months of 2015, to 12.1 per cent.

Sydney’s vacancy rate was 9 per cent, Melbourne’s 9.6 per cent, Brisbane’s was 15.6 per cent, Adelaide was at 15.1 per cent and Canberra was at 15.5 per cent.

Mr Ballantyne said there was a firm net absorption result of 85,400sqm across the capitals over the quarter, however lead indicators for office demand were mixed.

“A dichotomy exists between business confidence and hiring intentions,” he said.

“Most business surveys have confidence below historical averages, while job advertisement surveys have trended higher over the past 12 months.

“However, we view the positive trend in job advertisement surveys as a strong lead indicator for leasing enquiry.

“Our quarterly data collection meetings highlighted that the momentum we recorded in leasing enquiry in Sydney and Melbourne over the latter part of 2014 has continued into 2015.”