A number of multinational companies are choosing to establish offices in Perth. As a result, the Australian city is experiencing a wave of new construction in the CBD and suburban centres. There are both development opportunities and challenges as older buildings compete with new offices for tenants.
The Property Council of Australia has released an Office Market Report detailing the scale of new office development in Perth and these challenges. In six-month period ending in January 2014, the Perth CBD office vacancy rate increased to 9.0 per cent from 6.9 per cent.
The increase is linked to the decline of demand for office space by mining companies and businesses providing related services due the slowing down of mining investment.
Even though the overall vacancy rate has increased, demand for Grade A office space in the CBD has also risen.
This points to the commercial office market righting itself as businesses move into new office towers and the space they leave behind is filled by other tenants.
All the new major office developments in Perth today are pre-leased before construction starts, which ensures that the speculative building booms of previous years which led to blowouts in vacancy rates will not be repeated.
The presence of large multinational companies like Chevron, Shell, BP, Rio Tinto, and BHP Billiton will also support the Perth office market going forward. Growth in investment in the iron-ore sector is slowing, but it is expected that investments in LNG projects will continue to generate a good level of demand for office space.
Local companies like Wesfarmers have also established their corporate headquarters in Perth, despite taking over the national Coles Group conglomerate. The Big Six law firms and the major accounting firms all have large offices in Perth.
The City has seen an influx of investment from major property and construction firms which have been attracted by the world-class development projects underway in and around the CBD, such as Elizabeth Quay, Waterfront and the City Link.
The suburbs are seeing a number of new office developments, from Belmont to Subiaco and Herdsman through to Fremantle.
