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Second team showing from West Perth A-grade property

THE growing demand for floor space is not providing benefits for all property owners, particularly those at the upper end of the market.

Research from real estate agents FPD Savills included in the Property Council’s Office Market Report released last week indicates significant variations, street by street, in the returns to property owners.

In West Perth, the A-grade building strip has a vacancy rate of 16.8 per cent, with almost 8,000 square metres of space available out of a supply of around 44,000sq m, while in the central business district vacancies vary by more than 5 per cent depending on the street name.

FPD Savills research man-ager Chris Freeman said it was impossible to fully explain why Kings Park was out of kilter with what was occurring elsewhere in the property sector, and in demand for A-grade buildings.

“If you drive down Kings Park Road these days, there’s a [for sale or lease] sign just about on every building,” he said.

Slightly skewing the vacancy rates was the 1,000sq m building at 36 Kings Park Road, which was vacant awaiting redevelopment into apartments by developers Mair & Co, Mr Freeman said.

Taking this building out of the equation takes the vacancy rate back to 14.8 per cent, still significantly higher than the West Perth average vacancy rate of 9.78 per cent.

“I don’t think it’s that they [the occupiers] are moving away toward cheaper budget space. It’s an anomaly that it’s that high, particularly given the strong rental growth,” Mr Freeman said.

“The West Perth market in general has been very slow. It probably still hasn’t recovered from the slowdown as a result of things like the GST.”

But just around the corner on Ord Street with a supply of 23,000sq m, vacancy rates are sitting just above 3 per cent, while Colin Street and Hay Street, bounded by the freeway and Thomas Street have vacancy rates of 6.5 per cent and 6.3 per cent respectively.

To the north of Hay Street, West Perth property owners have an average vacancy rate of 5.85 per cent. On the south side of Hay Street vacancy rates jump to 9.9 per cent.

The Office Market Report also presents a different picture of the supposed shift in business from the east end to the west end of Perth.

While the overall CBD area across all grades has an overall vacancy rate of 9.1 per cent – and falling– the vacancy rate varies from 12.5 per cent for Hay Street through to 7 per cent for Adelaide Terrace.

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