CBD office vacancies climb
The void left by the mining services industry downturn continues to play out in Perth's office market with the vacancy rate climbing to 9 per cent in the CBD and 9.2 per cent in West Perth.
Property Council figures for the six months to January show Perth's office market was hit by falling tenant demand and a surge in vacant space being returned to the leasing market. In July, the vacancy rate was 6.9 per cent in the CBD and 7.6 per cent in West Perth.
Sublease office space relinquished by tenants and new supply gave the CBD office market a negative net absorption total of 33,938sqm for the past six months and a negative net absorption of 46,442sqm for 2013.
Joe Lenzo, executive director of WA's Property Council said the slump in demand for office space coincided with iron ore sector downsizing. Most of the vacancy blowout occurred in Perth's older buildings, he said.
There was 5904sqm of new CBD office space, moderating the vacancy rise. Only a trickle of new supply is expected this year but next year a spike in building completions would have an impact.
Mr Lenzo said changes in office demand, refurbishments and other uses for older buildings would shape the market.
"The non-iron ore sector, including investment in LNG gas projects is expected to continue to generate positive demand for office space," he said.
"We also expect Perth to follow the trend in other cities, where older office buildings (have been) withdrawn from the market for major upgrades or even other uses like apartments."
The average vacancy rate for capital city CBD markets was 10.4 per cent, ranging from 7.3 per cent in Hobart to 14.2 per cent in Brisbane.
Mr Lenzo said the Property Council's Office Market Report was a spot audit, compared with a measure used by property companies that accounted for vacant space plus space that will be coming on to the market.
