Perth, 3 April 2012 –
Perth CBD will continue to have the strongest rental growth of any capital city in Australia, with forecasts indicating a compound annual average of 4.5% per annum from 2012 to 2016.
According to the latest Australian CBD Office MarketView report by CBRE, this will be considerably stronger than the national average which is forecast at 3.8% over the same period.
CBRE Senior Manager, Global Research and Consulting, Luke Nixon said growth in the resources sector was forcing rents to climb quickly in the city, which had recorded the highest average prime CBD rent in Australia since the start of the GFC in late 2007.
“Prime net face rents were $716/sqm in December 2011, representing 10.2% growth. This is expected to escalate further in 2012 as the vacancy rate continues to fall,” Mr Nixon said.
The city’s overall vacancy rate was recorded at just 3.3% in January 2012, with the prime market even tighter with only 1%, or around 8,500sqm of stock, vacant.
However, 2012 is also expected to bring a considerable turnaround in net additions, after a drop last year following the withdrawal of 25,500 sqm of space at 197 St Georges Terrace.
New additions for 2012 will total over 150,000 sqm, or slightly more than 10% of the current stock levels.
Contributing to this are City Square’s Main Tower (76,000 sqm) and Raine Square (42,500 sqm), which are both due for completion this year.
CBRE Senior Managing Director, Office Services, Andrew Denny said developments such as this would cater for pent up demand in the CBD.
“Astonishingly, net absorption is expected to outpace supply for the year, with nearly all the new space already pre-committed to tenants, mostly related to the mining and resources sector,” Mr Denny said.
Moving forward to the 2013-2016 period, net absorption is expected to be more modest, averaging 23,000 sqm per annum as white collar employment growth slows. Construction activity is also expected to slow over this period.
On the investment front, demand increased considerably in 2011 with over $1billion worth of sales recorded. CBRE Managing Director, Western Australia, Peter Agostino said this was the highest level on record for the city, and largely a result of five sales that tipped the $100 million mark.
“Despite the extraordinary increase in sales volume, sentiment kept average prime yields steady around 8% for the entire year,” Mr Agostino added.
Rental growth, however, contributed a boost of over 10% in capital values over the same period.
While CBRE’s report indicates growth is expected to be flat for Australian office markets in 2012 due to concern over Europe’s sovereign debt issues, Perth is expected to remain largely unaffected by this thanks to continued support from the resources sector.
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