Perth office sector moves into the downturn phase of the cycle
Perth’s CBD office markets recorded negative net absorption in 2Q 2020
PERTH, 10 JULY 2020 – JLL Research has released 2Q 2020 statistics on national office markets. The figures showed negative net absorption of -147,600 sqm was recorded over the second quarter.
JLL Strategic Research Manager – Western Australia, Ronak Bhimjiani said, “the past 12 weeks have been challenging for the Perth CBD office market.”
“The COVID-19 pandemic quickly eroded economic activity in WA, nationally and worldwide due to forced lockdown measures being implemented. At the same time, business and consumers rapidly adapted to new ways of working. The impact of the outbreak is expected to be felt in coming months as companies return back to business and evaluate business conditions” said Mr Bhimjiani.
The Perth CBD recorded -10,500 sqm of net absorption over the quarter. However, this was a result of one large occupier move rather than a shift in demand due to COVID-19. The Perth CBD vacancy rate moved out to 20.1% in 2Q20 from 19.5% in 1Q20.
JLL’s Managing Director - Western Australia, John Williams said, “the West Australian economy is better placed than other states. Global economic recovery will be driven by government stimulus focused on infrastructure projects and the mining sector will be an indirect beneficiary of this investment. Whilst short term impacts in the office sector is a given it is possible recovery will be in the short to medium term albeit with reduced expectation on growth”said Mr Williams.
The national CBD office market vacancy rate increased by 1.8 percentage points from 8.4% to 10.2% in 2Q20.
All six of the monitored CBD office markets recorded negative net absorption in 2Q20.
JLL Head of Leasing – Western Australia, Nick Van Helden said, “Both Perth CBD and suburban enquiry levels and market activity continues to improve. JLL tracks inspection numbers by prospective office tenants. These inspection numbers remain down on the corresponding 2019 period, however the June monthly figures show a significant increase from April and May indicating tenants are reverting back to a normal decision making pattern.”
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