THE law of supply and demand with regard to quality office space has allowed rental levels within the West Perth office precinct to steadily increase.
According to property consultant and real estate agent group Chesterton International, during the past six months the introduction of new Grade A space and economic uncertainty has halted the growth in rents.
Chesterton research analyst Anthony Vulinovich said in this period there had been a minimal amount of leasing activity, especially within the higher grades.
“We expect leasing over the next six months to follow a similar trend,” Mr Vulinovich said.
Currently, Grade A net effective rents are between $185 and $215 per square metre, with Grade B buildings between $125 and $150 per square metre.
“It is expected that any new leasing deals will involve various incentives depending on the tenant, the length of the lease, the nominal rent and the financial requirements of the building owners,” Mr Vulinovich said.
He said West Perth rental levels were currently below a point where new construction will be feasible.
“In our view, rental levels would have to increase to $230 to $250 per square metre (net effective),” Mr Vulinovich said. “However, construction is anticipated in the medium term if substantial tenant pre-commitments can be obtained,” he said.
