Perth’s office market is set for continued growth, with prime net effective rents expected to increase at an average annual rate of 6% from 2025 to 2029, driven by strong demand and limited office supply. According to a recent report from JLL, the scarcity of new office space in Perth, combined with robust base demand, is fueling the acceleration in rent growth.
The report highlights that as broader economic conditions stabilize, office assets are becoming more attractive to investors. While acquisition activity remains selective, it has eased compared to the previous year, reflecting improved market sentiment.
Key insights from the JLL report include:
The vacancy rate in the Perth CBD increased slightly by 0.1 percentage points to 15.8% in Q4 2024. The prime grade vacancy rate rose by 0.3 percentage points to 13.3%, driven by contractionary activity among both small and large occupiers (over 1,000 sqm).
Despite a decline in net absorption to -2,300 sqm in Q4 2024, from the previous quarter’s positive reading of 2,900 sqm, annual net absorption remains positive, although it is below the 10-year quarterly average of 2,100 sqm.
New office supply is expected to remain constrained, with no major projects completing during the quarter. However, two office developments in the Perth CBD, totaling 37,400 sqm, are slated for completion in 2025.
A total of 11 office projects in the Perth CBD, covering 299,800 sqm, have received approval, but the progression of these projects depends on securing substantial pre-commitment from tenants.
Investment activity saw an uptick, with average prime net face rents rising by 0.5% quarter-on-quarter to AUD 663 per sqm per annum, marking a 2.0% year-on-year growth. Prime net effective rents also increased by 0.5% quarter-on-quarter to AUD 286 per sqm per annum, with a 1.4% year-on-year growth.
Perth CBD prime office yields remained stable at 7.38% in Q4 2024, while secondary yields also held steady at 9.00%. On an annual basis, prime office yields have decompressed by 25 basis points.
With the office market in Perth continuing to evolve, limited supply and steady demand suggest strong prospects for rent growth and investment in the coming years.
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