Perth is currently a tenant’s market and is likely to remain that way for the foreseeable future. Here’s a quick snapshot ...

Vacancy rates

Perth's CBD’s official vacancy rate is currently being reported at 14.9%. However, some reports estimate the actual figure to be hovering at around 15.2% following PCA’s boundary changes (see figure 1), which shifted its landscape to a more residential focus. This revised rate also factors in the 24,415 sqm worth of stock injections and 139,603 sqm worth of withdrawals:

Injections

• Westralia Square 2 (9,100 sqm)
• QV1 (6,687 sqm, refurbishment) 
• Expansion of the Perth CBD Northern Boundary  which added an additional 9,068 sqm to the CBD

Withdrawals

• CBD boundary change that removed (majority) secondary grade office stock west of Hill Street from the CBD

However, all-in-all, Perth's office market is showing strong resilience due to:

• Office expansions: Business growth remains the dominant theme in Perth's office market. This comes off the back of Western Australia's strong mining sector and its positive influence on other industries.
• Office occupancy: Perth is enjoying higher occupancy rates than what is currently being seen in other Australian cities.
• Low unemployment: WA boasts robust employment growth, with an unemployment rate of only 3.9% (December 2023).
• Increased demand: Perth is witnessing strong leasing activity, with a record-high number of enquiries over 2024.
• New growth sectors: With businesses within various sector,  like health, education and technology, actively seeking office space

Rents and incentives

Prime and Secondary Net face rents increased over the past quarter, sitting at $684 psqm and $461 psqm, respectively. The flight-to-quality trend was the main driver of the jump in Prime rents. ​​However, the city's new Premium stock also commands higher rents thanks to inflation and sky-high construction costs. High incentives of between 46%-53% (depending on the grade, location and building/landlord vacancy profiles) offset increases in face rents.

Subleasing

Compared to other cities, Perth's commercial sublease vacancy is negligible at 0.3% (circa 6,000 sqm) of total stock. This is due to strong occupier demand - the highest in the country - and the city's trend towards office expansion.

Upcoming supply

Over the next few years, several developments are planned to come online, including:

• Nine The Esplanade (33,000 sqm / 50% precommitted), scheduled for completion in 2025
• Capital Square Tower 3 (13,700 sqm), scheduled for completion in the first half of 2024
• Lot 4, Elizabeth Quay (70,000sqm), scheduled for completion in 2027

The completion of some of these major developments (e.g. One the Esplanade) will add upward pressure to Perth’s Prime vacancy rate (12.7%). However, in the near term, Perth’s vacancy rates are likely to go down as consistent demand contends with limited supply.

How we can help

Tenant CS is a commercial tenant advisory business that offers tenant representation services in Perth. We can also cater to organisations across Australia, with a particular focus on Sydney, Melbourne, Brisbane, Adelaide and Canberra.

We represent you, the tenant, and our in-depth knowledge of the Australian leasing market gives our clients a competitive advantage when it comes to finding a space or negotiating a commercial lease.

If you’re on the hunt for tenant representation services in Perth, book a call with our team today!