Perth CBD Office Figures Q4 2023

February 1, 2024 7 Minute Read

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  • WA’s economic outlook remains positive but is forecast to slow due to a combination of slowing export growth and consumption headwinds from higher interest rates.
  • Robust leasing activity continued into 4Q23 with c.26,700 sqm of new leasing volumes (transactions ≥ 500 sqm), up 8% y-o-y. CBRE’s leasing enquiry volumes in the CBD continued to normalise from record highs in 1H23, with total leasing enquiry volume of c.44,300 sqm in 4Q23 .
  • Perth’s CBD officially had net absorption of -79,031 sqm in 2H23, however this was mainly due to the one-off impacts of a boundary change. We estimate 2H23 net absorption of c.18,700 sqm after adjusting for the impact of the boundary change.
  • Vacancy rates fell to 100 bps h-o-h decline in vacancy to 14.9% as at the end of 2023, we estimate the apples-to-apples vacancy rate would be 15.2%, excluding the one-off benefit from the boundary change.
  • Prime net face rents increased to $684/sqm (+1.1% q-o-q and +5.2% y-o-y). Secondary net face rents saw a slight increase to $461/sqm (+0.3% q-o-q and +2.4% y-o-y) in 4Q23.
  • There were no new developments completed in the period, as Capital Square Tower 3 (~13,700 sqm) is now expected to complete in 2024. Apart from Capital Square Tower 3, a further c. 24,000 sqm is scheduled to become available in 2024 as refurbishments at QV1 and 186 St Georges are completed.
  • 4Q23 saw one office transaction in the Perth CBD, with 10 William Street sold for $21 million to Stanley International College.
  • Prime midpoint yields held steady q-o-q at an average of 7.18%, with secondary midpoint yields also unchanged q-o-q at an average of 8.00%.