CBD real estate specialists expect the big increase in sub-lease office space relinquished to the market when iron ore prices fell last year to drive up the CBD vacancy rate which will be released tomorrow in the Property Council of Australia's Perth office market report.
The Property Council reported a CBD office market vacancy rate of 4.2 per cent in the first half of last year while West Perth's vacancy rate was 3.2 per cent. Net absorption for the CBD - a key indicator of demand - was a record 115,503sqm.
In its latest research, Jones Lang LaSalle still has Perth and West Perth as the two office markets with the lowest vacancy rates in Australia and despite the jostling, West Perth still has the top spot with a vacancy of 5.2 per cent while the CBD vacancy is 5.6 per cent.
The company's head of leasing Nick Van Helden said Perth's overall vacancy rate increased after engineering firms and some resource companies put surplus office space back on the market last year.
Although tumbling iron ore prices have since rebounded, the fall last year put on hold expansion plans and office space needs for businesses servicing the resource sector.
According to industry sources, engineering firms were behind most of the sub-lease space with some of the notable firms releasing surplus space, including KBR Australia, Worley Parsons and AMEC.
Another chunk of sub-lease supply last year came from BHP which sub-leased office space at Central Park when it moved to Brookfield Place. A lot of the sub-leased space was leased for shorter 12 and 18-month terms by tenants wanting the flexibility to claim it back but agents say other spaces have been secured for longer terms.
Around 5000sqm of BHP's surplus space at Central Park was reportedly taken up by global oil and gas explorer and producer Inpex while in another large deal, Chevron is understood to have taken up space at 197 St Georges Terrace that was sub-leased by AMEC.
Graham Postma, director of office leasing at Savills said lingering effects of the new supply may be quick to dissipate.
"Most of the sub-lease space that was going to hit the market already has," he said. "There could be a bit more to go but not much."
Savills also expects the sub-lease supply will drive a slightly higher CBD office vacancy rate than in 2012."We think the CBD will still have a single digit vacancy rate but it will still be a very good number considering the amount of stock and supply," Mr Postma said.
The new magazine for a new generation of West Australians.Click here to download »
All the latest market figures from Australia and the world.Click here »
'The West Australian' is a trademark of West Australian Newspapers Limited 2013.
All rights reserved.
Select your state to see news for your area.