Perth, 29 October 2013 –The tide is turning in the Perth office leasing market. While the stock of office sublease space in Perth has climbed to over 80,000sqm, this is expected to be the peak of the market according to the latest forecasts from CBRE.
CBRE Senior Director, Office Services, Andrew Denny said the volume of sublease space on the market increased by 7,507sqm during September according to the firm’s latest Perth Sublease Barometer, however the rate of new supply had slowed over recent weeks.
“Our view is that we are now at peak sublease vacancy levels and the coming months will see a reduction in available space for sublease,” Mr Denny said.
“Perth can move quickly, and the likely outcome is that the market will perform on a stronger basis than currently expected based on higher than forecast future demand levels.”
He linked the turnaround in leasing conditions to the recent Federal election result.
“Although it is early days, the election result was a turning point for the Perth CBD leasing market, with a noticeable return of confidence and activity levels in the following weeks. Enquiry levels have not only increased, but the nature of leasing enquiries has altered,” Mr Denny said.
Prior to the election result, Mr Denny said enquiry was substantially to reduce space needs and/or leasing costs.
“Current enquiry is more focussed on expansion and/or larger space needs. Good examples are the Shell requirement for an additional 2,000-3,000 sqm, Woodside for an additional 700-900sqm and Link Market Services for up to 2,000sqm,” Mr Denny said.
“Moving forward we expect Q1 2014 to see further positive news for the leasing market with a further pick up in enquiry and transaction levels.”
CBRE’s latest Perth Sublease Barometer highlights that sublease space accounts for 5% of the total CBD office market at present.
A slowdown in the mining sector and a rationalisation of staff in the engineering and resources support services sector has been the predominant driver behind the increase in the sublease market, with the volume of space having increased by 72% since the start of this year.
The greatest amount of sublease space (51,437sqm) has been generated by engineering companies heavily reliant on contracts from the major iron ore operators. Some of these companies include Worley Parsons, Clough and Aecom.
A further 11,431sqm of the available space is linked to the mining sector.
The finance and insurance sector has been another driver, accounting for 11,928sqm of space – the majority of this being the Bankwest sublease space at 108 St Georges Terrace, which has a short lease tail.
Contraction accounts for an estimated 97% of the space on the market, with relocation accounting for the remaining 3%.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website atwww.cbre.com.au.