Perth office vacancy rate rises


Perth's office vacancy rate is expected to double over the next few years as the resources slowdown leaves companies requiring less space.

The weaker outlook for commercial leasing comes as companies remain under pressure to reduce costs and more office space becomes available next year.

Miners and mining services companies are also cutting staff at a rapid rate as investment in the West Australian mining sector falls.

Data from the Real Estate Institute of Western Australia (REIWA) shows hundreds of commercial properties are available for lease in the resources-focused business hubs of West Perth, Subiaco and Perth's CBD.

The boutique business districts of Subiaco and West Perth have traditionally attracted small to medium-sized miners and mining services companies while the bigger players favour the CBD.

Perth's CBD still has the lowest office vacancy rate in the country, sitting at around six to seven per cent, but a report by property forecaster BIS Shrapnel shows the rate is expected to increase to around 13 per cent by mid-2016.

BIS Shrapnel's senior project manager Lee Walker said the Perth office market had experienced a sharp turnaround in demand over the past six to 12 months as many resources companies switched from rapid expansion to containing costs.

"This is just the start," Mr Walker said.

"Our fear is that as more completions come on stream in 2014-15 and 2015-16, the vacancy rate will rise more sharply, potentially up to 13 per cent."

However, with new office buildings not due to be completed for 12 to 18 months, it expects the CBD vacancy rate to stay around six to seven per cent over the next financial year.

The BIS Shrapnel Perth Commercial Property Prospects 2013/2023 study shows office employment growth and the take-up of office space is expected to endure a sustained period of weakness over the next three years as construction associated with the mining boom begins to weaken.

Record employment levels and demand for office space during the boom years were underpinned by high investment in construction which had now finished, the report found.

Around half of Perth's CBD is occupied by resources companies or companies which service them.

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