Vacancy rates

Perth's CBD office vacancy rate is sitting at 15.9% following the completion of Capital Square Tower 2 and several other refurbishments.

This figure is expected to increase over the coming years as additional supply comes online, including:

• Brookfield's EQ West tower (51,000 sqm)
• Capital Square Tower 3 (15,690 sqm)
• GDI's Westralia Square 2 (9,100 sqm)

Over 170,000 sqm is also planned for 2025 and beyond, adding to vacancy pressure. However, increasing construction costs, inflation and supply chain issues may delay project plans.

Premium vacancy remains the lowest of all grades at 6.6%. However, the completion of One the Esplanade and other supply additions will add upward pressure to this.

A-grade and B-grade premises offer substantially more availability, with vacancy currently at 16.7% and 20.9%, respectively.

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 3.6% (March 2023).
• Increased Government demand: Perth is witnessing strong leasing activity from both the Federal and State Governments, marking the first time positive net absorption has been observed in many years.

Rents and incentives

While Premium grade Net face rents have held steady over the past quarter, they have increased by 7.8% over the year, now sitting at $737 psqm. On the other hand, A and B-Grade net face rents increased Q-o-Q, now hovering at around $618 and $473 psqm, respectively. Incentives remain high at 45%-53%, depending on the grade, location and building/landlord vacancy profiles.

Subleasing

Compared to other cities like Melbourne, Sydney, and Canberra, Perth's commercial sublease vacancy is negligible at 0.4% of total stock (7,227 sqm). This is due to strong occupier demand - the highest in the country - and the city's trend towards office expansion.

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, get in touch with our team today!‍

Want to know more first? Read our Commercial Leasing Agreement Checklist before signing on the dotted line, or here to read about why it pays to have a tenant advisor on your side!