Perth is currently a tenant’s market and is likely to remain that way for the foreseeable future. Here’s a quick snapshot ...

Vacancy rates

Perth CBD's vacancy rate finished the period at 15.5%, marking a 0.8% increase over the last six months. This rise was largely due to an influx of new supply entering the market, including Capital Square Tower 3 (13,681 sqm) and the QV1 refurbishment (21,306 sqm). Offsetting some of this new supply were withdrawals for refurbishment and repurposing, including 256 St Georges Terrace (22,530 sqm) and 100 St Georges Terrace (6,200 sqm), both undergoing refurbishment, and 641 Wellington Street (2,760 sqm), which is being repurposed into student accommodation. In total, 34,513 sqm of stock withdrawals helped mitigate the impact of the new supply additions on overall vacancy rates.

Low upcoming supply

In recent years, Perth has experienced a surge in new supply, predominantly in Premium and A-grade office space, outpacing its historical average—comparable only to the influx during the last mining boom. However, looking ahead to 2029, the outlook is much leaner. Only 70,000 sqm of new supply is anticipated, with Nine the Esplanade being the sole new development, already 50% pre-committed. The remainder consists of refurbished stock, including 256 and 100 St Georges Terrace, which were recently withdrawn for refurbishment and are expected to return to the market later this year. 

This has created a noticeable supply gap between now and 2029, with several proposed developments remaining uncommitted due to soaring construction costs.

Evolving workspaces and the flight to quality

Perth CBD has been at the forefront of the nation's office revival, with occupancy levels rebounding to an impressive 93% of pre-pandemic rates. This strong return to office, coupled with the influx of new Premium and A-Grade stock, highlights the market's resilience and optimism. 

Since 2022, a notable flight-to-quality trend has emerged, with prime buildings attracting the majority of leasing deals. Office spaces are evolving in response to tenant needs, offering more breakout areas and collaborative environments, while distinctive designs are becoming essential for fostering employee engagement and in-office collaboration.

Rents and incentives

Prime net face rents saw a notable increase over the past quarter, closing at $692 per sqm, while Secondary net face rents remained steady at $461 per sqm. The ongoing flight-to-quality trend has been a key factor in driving up Prime rents, which have grown consistently by 1.1% quarter-on-quarter and 4.8% year-on-year. Rising inflation and soaring construction costs have also contributed to this upward pressure on rents. However, high incentives, ranging from 46% to 53% depending on the grade, location, and landlord vacancy profiles, continue to soften the impact of these rent increases for tenants.

Subleasing

Compared to other cities, Perth's commercial sublease vacancy remains minimal, with volumes slightly declining to just 0.4% of total stock. This low sublease rate is driven by strong occupier demand—the highest in the country—and a clear trend toward office expansion within the city.

How we can help

Tenant CS is a commercial tenant advisory business that offers tenant representation services in Perth. We can also cater to organisations across Australia, with a particular focus on Sydney, Melbourne, Brisbane, Adelaide and Canberra.

We represent you, the tenant, and our in-depth knowledge of the Australian leasing market gives our clients a competitive advantage when it comes to finding a space or negotiating a commercial lease.

If you’re on the hunt for tenant representation services in Perth, book a call with our team today!