Vacancies tipped to stay at 12%

VACANCY rates in Perth’s CBD should remain at about 12 per cent to 13 per cent over the next twelve months, according to the latest research by Colliers Jardine.

In accordance with recent Property Council of Australia’s figures, the research revealed the vacancy rate increased from 11.4 per cent in January 1999 to 12.3 per cent in July – similar levels to early 1998.

Research manager David Cresp said the increase was a result of an rise in stock of 10,338 square metres – 9,000 of which was the Council House refurbishment.

Negative net absorption of 6,091 square metres, calculated by comparing January 1999 figures of occupied space in the CBD to July 1999 figures, also played a part in the vacancy rate.

Mr Cresp said the negative absorption had been mainly caused by the continuing downturn in the mining sector with mining and engineering companies increasingly looking at sub-leasing space.

“Over the last three to four years a number of mining related companies have taken office space on relatively short term leases of two to three years for specific projects,” he said.

“What we are seeing with the downturn is that when these leases are expiring they are generally not being renewed.”

He said there continues to be little space available in Perth’s four premium-grade buildings with an average vacancy rate of less than 5 per cent.

Currently, there are around 114,000 square metres vacant in A and B grade buildings. Mr Cresp said the result was great choice for prospective tenants with rents remaining competitive and relatively stable over the last twelve months.

Colliers Jardine commercial leasing director John Adcock said the vacancy rate would fall if there was some level of recovery in the mining sector.

“The medium to long term outlook for Perth continues to be very bright with a large number of mining related projects still likely to proceed once the market turns,” Mr Adcock said.

“Despite the slow down so far in 1999, mining and resource companies have been responsible for 14 per cent of all major leasing transactions, although at times their movements are resulting in less space than previously occupied.

“However, this compares to 22 per cent of major leasing transactions in 1998.”

He said information and technology and telecommunication companies had become more active in the the CBD office market in 1999 with substantial commitments expected during the remainder of the year.

“IT and telecommunications companies have accounted for 18 per cent of major leasing transactions so far in 1999 – up from 5 per cent in 1998,” he said.

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