Perth’s position as the nation’s tightest office market is posing serious problems for employers trying to attract quality staff, according to Colliers International director of office leasing, Ian Campbell.
Perth’s position as the nation’s tightest office market is posing serious problems for employers trying to attract quality staff, according to Colliers International director of office leasing, Ian Campbell.
Mr Campbell said the lack of space was hindering the expansion and recruitment plans of many CBD-based companies, a situation made worse by soaring rents of up to $800/square metre on lease renewals.
“It’s a fact that WA employers are struggling to find quality staff, and if you’re only offering your employees office space that’s very tight or of poor quality, you may very well find you become a less-preferred employer in this market,” he said.
“These companies are growing; they outgrow their existing premises and they are unable to secure a bigger tenancy.
“They then end up with a piecemeal office setup, with groups of people here and there, and that then raises issues with the culture of the office.”
Colliers research has found just a small amount of refurbished stock is due to come online in the Perth CBD in 2008, chiefly the Wesley Centre and GPO building, which are almost fully pre-committed.
The Century City project under construction at 100 St Georges Terrace will be the first to deliver new office space to the market in early 2009, with about 30,000 square metres.
“The dilemma these businesses are faced with is whether they stay in good quality office accommodation in an attempt to keep quality people, but then risk losing them because they are squeezed for space. It’s a very real issue that Perth-based companies will be facing for at least the next 18 months or so,” Mr Campbell said.
Colliers research consultancy manager Erwin Edlinger said not only were tenants being held to ransom on the rental front, but there were cases of Perth tenants being offered lump sum payments to move on.
“Tenants who fail to exercise their lease renewal options are having to pay in excess of $800/sqm, and are also having to lock in to long-term leases in order to hold on to their current office location,” he said.
Mr Campbell said Perth’s emerging suburban office market was presenting the only real option for tenants wishing to expand, with an estimated 150,000sqm of space expected to come online in the medium to long term.
Pre-commitment deals of between $350/sqm and $450/sqm offered in emerging suburban markets such as Herdsman, Belmont, Osborne Park, Burswood and Victoria Park, made them extremely competitive in comparison to current market rates, he said.
