Perth Office Market Trending in the right direction
JLL Research has released 3Q19 statistics on national office markets
PERTH, 16 October 2019 – JLL Research has released 3Q19 statistics on national office markets finding Perth CBD recorded a positive net absorption of 7,700 sqm in 3Q19 and 39,800 sqm over the 12 months to September 2019. Vacancy remains elevated (19.4%), but the spread between prime (14.4%) and secondary (27.2%) remains wide reflecting stronger occupier demand for prime grade assets.
Karstens, an exceptional conference, function and meeting venue company with office locations across Australia and New Zealand, have leased 988sqm (the whole of level 1) at 111 St Georges Terrace, Perth. The deal was negotiated by Senior Director, Head of Office Leasing Nick Van Helden of JLL and is a new entrant to the Perth office market, showing continuous confidence in the Perth market.
Mr Van Helden said “enquiry levels remain strong overall with strong interest from new tenants entering the Perth CBD market, with JLL having transacted over 12,000 sqm of new tenant deals this year so far.”JLL’s Manager of Strategic Research, Ronak Bhimjiani said “headline vacancy in the Perth CBD has decreased to 19.4% (down 0.9%) over the September quarter with positive net absorption of 7,700 sqm, driven by multiple tenant moves largely expanding their operations. The 1% decrease in the Perth CBD overall vacancy rate over 3Q19 is the largest quarterly decrease in vacancy in comparison to other states. This reinforces our view that the Perth office CBD market is continuing its way into a recovery.”
“The Perth CBD leasing market has experienced a tangible improvement in leasing conditions during recent times. Net absorption has remained positive since 1Q18, with over 73,900 sqm of office space taken up since then”
“It is anticipated that positive demand will continue over the rest of 2019, which will lead to a continued downward trend in the overall vacancy rate” said Mr Bhimjiani.
Activity from existing CBD tenants is likely to remain, driven by lease expiry and the opportunity to upgrade office space. Secondary vacancy is expected to remain elevated as a result of occupier upgrades.
The marked improvement in WA’s economy should also provide investment opportunities for new entrants who may now consider entering the Perth market to establish or expand their business footprint.
The long-term spread between Perth and Sydney CBD average prime yields is 145 basis points (bps). However, as of 3Q19, the spread has widened to 206 bps. This, together with the limited number of purchasing opportunities should enable the Perth CBD office market to sustain strong investor appetite going forward.
Recent mining investment and public infrastructure announcements in WA is positive for sentiment across the Perth CBD.
Expected employment growth in the WA economy should lead to positive demand for office space in the Perth CBD.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of nearly 92,000 as of June 30, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com