Posted on Friday, October 11th, 2013 in by Matt Garmony
The contraction in the Perth CBD office market, following a slowdown in the resources sector has flowed onto the fringe and suburban office market. Suburban office market throughout the Perth Metropolitan area have seen an increase in vacancy rates to almost 12% in August 2013 following the downsizing of construction and engineering firms with an increased number of offices becoming available to the market on a sublease basis. As the increase in supply of office space becomes available there is a trend for businesses to upgrade the quality of space with A-grade buildings being the least affected by vacancy, however market rents have trended downwards. B and C grade buildings have recorded the highest vacancy rates and in this market and are taking longer to lease. Coupled with this, there are a large number of new office buildings in the suburban office market currently under construction which will increase the supply of office space this year and the coming years.
This decline in office rental rates and extended vacancy periods in our opinion will have an effect on the market value of suburban offices and we may see an increase in yields for these types of properties.
Should you require rental advice for your upcoming market rent review or a valuation on your commercial property given the recent changes in market conditions, please do not hesitate to contact the licenced valuers at Garmony Property Consultants.