Office Tenants Taking More Space for Fewer Workers
Momentum continues to build in Perth’s CBD office market, with experts tipping vacancies to continue to fall as a shakeup gets underway in the structure of leases.
Outside of the pandemic, demand for office space has been on a steady upwards trend in Perth since vacancies hit a cyclical peak at the start of 2017.
The latest data from the Property Council of Australia showed 47,853sqm of net absorption in the six months to January, with the market now having fully recovered from the impacts of COVID-19.
In line with the increased demand, research from Cygnet West revealed there have been modest rental rises in several A-Grade buildings approaching full occupancy.
In the three months to the end of December, average A-Grade face rents increased by 2.15 per cent, to $590/sqm.
Premium grade office rents averaged $700/sqm at the end of December, after having been stable for the previous 12 months.
Cygnet West Commercial Leasing Partner Dustin May said much of the demand for CBD office space was currently coming from tenants that originally had leases expiring at the start or peak of the pandemic but had deferred major decisions due to the widespread economic uncertainty.
“In 2020, we saw a number of tenants put their relocation plans on hold,” Mr May said.
“A lot of tenants negotiated short term extensions of leases in exchange for some rent relief, and that pushed out a lot of demand for office space by about 18 months or two years.
“We’re starting to see that demand come back now; they are more confident on where their business is going and they now know how they want to work moving forward.”