SOUTH PERTH OFFICES
THE VACANCY FACTOR 1990- today and
RENT AND SALES VALUES 1983- today
Speculative office building took place in the Mill Point between 1979 and 1983. A crash in 1982 produced hardship in the office market for sales and leasing. Take-up began slowly from 1983 and then for a four year period up to the peak of the "eighties boom", South Perth was effectively full.
Even after the stock market crash of October 1987 activity in property actually accelerated, since the government promoted huge liquidity in financial markets, and there was a general lack of faith in shares. Property peaked around 1989 and office vacancy increased during Keating's "recession we had to have". Austerity measures damaged a market that was already self-correcting.
The chart above plots vacancy from 1990 as vacancy steadily reduced, and business confidence increased. When the "resources boom" peaked in 2007, almost no office buildings had been constructed in Perth, and South Perth since the eighties. Vacancy in Perth CBD reached unprecedented levels below 1% , and Perth CBD rents broke above $1,000 per square metre p.a. Perth became one of the most expensive cities in the world. Some "rent refugees" from the city sought better value outside the CBD. South Perth rents increased dramatically after a fifteen year plateau and South Perth was once again effectively full.
First ripples of the "global financial crisis" made their presence felt in late 2007 as one or two leasing deals fell through. The Australian stock market crashed in March 2009. South Perth office rents and sales values retreated a modest 15% from the peak, and vacancies rose once again. Early 2012 saw the office vacancy factor at the highest level in twenty years, but even so this was not an extreme. About two thirds of the offices in the area are now owner-occupied, and this promotes stability during volatile economic times.
The chart above appeared to show in 2012 that business confidence was returning as more office space was occupied. In the eighteen months to March 2014 however, vacancy leapt to a new high for over twenty years. The figures do not include new projects. The market is in a new phase of extreme volatility.
Clearly the economy in general and this office market in particular need to be re-invigorated. The new town-planning scheme for the Mill Point "station precinct" will see a number of new office and apartment projects go ahead, so the character of this area will progressively change in the next few years.
South Perth has been established as an attractive office location, close to the city. South Perth is home to many professional people who would love to live AND work in this area, but almost no new office construction has occurred in the "Mill Point" for thirty years*: since the early eighties! South Perth residents are forced by necessity to commute to their jobs elsewhere because larger and more modern office buildings exist in the city of Perth, West Perth and Subiaco. * as at August 2012