Flexible workspaces give impetus to Perth CBD renaissance
Flexible workspace operators have put Perth’s office vacancy numbers on a steady downward trajectory with the latest Office Market Report from the Property Council of Australia revealing the CBD office vacancy rate has fallen to 17.6 per cent, down from 18.5 per cent a year ago.
Property Council WA Executive Director Sandra Brewer said the numbers, which show vacancy rates over 16 per cent in every grade except Premium (at 8.1 per cent) were trending in the right direction. It was the sixth consecutive fall in vacancy, which is measured every six months.
“Big landlord refurbishments, upgrades and an uptick in new café offerings, including 100 Cups, Arlo and Little Soho Coffee Co, are contributing to a sense of optimism along St Georges Terrace,” Ms Brewer said.
In the six months to January 2020, total office vacancy in the CBD market slipped from 18.4 per cent to 17.6 per cent, driven lower by positive net absorption of 32,738sqm for the six months. Over the six months to January 2020, 23,718 sqm of space was supplied to the market. This year, another 19,566sqm of space will become available, with no other space projected until 2023. The first sod was turned on Chevron’s 52,000sqm Australasian Elizabeth Quay head office, to be finished in 2023, last week.
“We are really excited about our new East Perth initiative, which separates East Perth vacancy rates for the first time,” Ms Brewer said.
“We now have clearly defined CBD, West Perth and East Perth markets, making it easier for decision makers to analyse the make-up of the vacant stock. The Perth CBD boundaries have not changed,” Ms Brewer said.
“Drilling down into the East Perth results, with an overall vacancy rate of 21.8 per cent, the greater vacancy is in the secondary stock (26.4 per cent), which accounts for 194,057sqm of the 336,236sqm. Now we have the numbers, we can help decision makers devise ways to revitalise East Perth to create a more lively centre.”
Vacancy rates in West Perth rose to 17.5 per cent in January 2020 from 14.8 per cent a year earlier. The West Perth vacancy rate, at 16.9 per cent in July 2019, was hampered by negative demand for space at -4625sqm.
West Perth vacancy rates were 12 per cent-plus across each of the grades, with 12.9 per cent vacancy in A Grade and 20.5 per cent in B Grade. D Grade was West Perth’s best story reporting a vacancy rate of 19.5 per cent, down from 24.7 per cent in July 2019.
In the CBD, the net absorption figure, of 48,661sqm for the 12 months to January 2020, is triple the 15,333sqm of a year earlier.
Standout 2019 Perth office performers included Dexus’ 240 St Georges Terrace and Kings Square 1 as well as AMP Capital’s 140 St Georges Terrace, now 99.6 per cent leased. Flexible workspace giant WeWork joined other co-working groups Regus, Liberty and WA’s SpaceCubed, inking Perth’s biggest leasing deal of 2019 when it signed for 7900sqm in Central Park in February. It added another 3400sqm in William Square in Northbridge in June.
Dexus launched its premium, flexible collaborative workspace Dexus Place Perth in early October.
“Co-working operators account for more than 10,000sqm leased in 2019,” Ms Brewer said.
“It’s no secret Perth’s office market has faced challenges but there’s now a greater sense of optimism as WA’s economic fortunes are expected to improve.”