Office tenants have been warned to expect significant increases in rent in the next 18 months as Perth’s vacancy rate tightens and developers await anchor tenants to begin construction on new buildings.
The Property Council will release its vacancy rates next month, with figures expected to significantly drop from December’s 13.4 per cent to approximately 10 per cent.
This is a welcome sign that Perth’s long-struggling leasing market has recovered, with the added possibility that Perth will have the beginnings of a new building on the skyline before the year ends.
As rents increase in an improved leasing market, the difference between rents for existing premium buildings and those for a new building is closing, making it more likely tenants will commit to new constructions.
This has developers aggressively marketing for anchor tenants for several potential office tower sites in the CBD area, seeking to underwrite construction with pre-commitments.
Six main sites are in contention in the office tower race: Multiplex and Griffin Group’s 125 St George’s Terrace, the Pivot Group’s 100 St George’s Terrace, Hawaiian and Multiplex’s Bishops See, Luke Saraceni’s Raine Square and the currently State Government-owned Old Treasury site and William Street site above the train station, which is currently under construction.
The government has only recently become a major contender in the race, with the government indicating preference would be given to housing Government tenants on government-owned sites.
With more than 60,000sqm of government tenancies expiring in 2007, the government has significant influence over where a new office tower may be.
Earlier this month, Multiplex and the Griffin Group announced they had lodged a development application for a 28-level office tower at 125 St George’s Terrace, the sixth development application lodged for the site since 1988.
