In its June 2017 Office Market Report, Investa says the Perth CBD office market is finally emerging from its longest cyclical downturn since the early 1990s.
Following five-years of deteriorating market conditions, leading indicators of market activity now present a moderately optimistic outlook for the Perth office market in the coming years, according to the report. These factors include increasing net absorption of CBD office space coupled with low levels of new development for at least five years. Investa also expects Perth CBD office vacancy rates to gradually decline in the coming years.
Anthony Vulinovich, Director, Raine & Horne Commercial WA agrees this is good news for the Perth market. “I would say that it’s a tipping point whereby we are seeing the market stabilise with most tenants past the point of vacating the Perth market, or similarly downsizing their space requirements. So, the net effect is that we are not seeing vacancies increase.”
The market will stabilise now in terms of vacancy levels, noted Anthony. “Over time vacancy levels will decrease given new construction will be capped and its likely older unlettable space will be taken off the market and either refurbished or remodeled for residential or other uses,” he said. “The flight to quality will remain for great space at great rates – but vacancy rates for older stock will continue to grow and be a challenge for investors who hold it.”