Perth’s office market could be sheltered from the full economic impact of COVID-19, with low levels of new supply and high exposure to the mining sector creating resilience in the sector.
A new CBRE MarketView Snapshot highlights how minimal new supply entering the market in 2022 and 2023 would help absorb the impact of COVID-19, in comparison to high supply pipelines in Sydney and Melbourne.
CBRE’s Senior Director of Office Leasing, Andrew Denny, said Perth’s office sector was in a relatively favourable position.
“Perth’s office markets are likely to perform better than the major eastern states markets given our high exposure to the strongly performing mining sector and low exposure to the under-pressure education, tourism and hospitality sectors,” Mr Denny said.
“There has been surprisingly strong leasing activity, with good new enquiry, high levels of inspections, and a healthy level of negotiations occurring. This has been evident from the start of June onwards with activity accelerating through June. This surge though may be a reflection of enquiry and negotiations that were put on hold during the main Perth COVID-19 period, now entering the market, and may not be sustainable moving into 2021.”
The key indicator for the future health of the leasing market is the level of sublease space available, Mr Denny explained.
According to CBRE Research, CBD sublease availability increased from 29,900sqm to 38,000sqm during Q2, with June accounting for all the increase. This is representative of a 27% increase in sublease availability.
“Although it is early days, at this stage this is only a relatively moderate increase in absolute sqm and not one for concern. By comparison, peak sublease post-resources boom was 100,000sqm in December 2015,” Mr Denny said.
Occupancy levels in Perth’s CBD office buildings are nearing 60-65%, with most tenants having returned to the workplace – the exception being the large corporate tenants, where many workers remain working from home.
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