Perth CBD prime net effective office rents to grow by 5.1% in 2025

Rents grew by 3.0% in Q2 2024.

With Perth CBD white-collar employment growth expected to grow in line with forecast population trends, JLL analysts forecast prime net effective rents to continue accelerating, with projected growth of 5.1% per annum over 2024 and 2025.

“With recent uncertainty around cost of debt movement, investors are likely to still be selective in terms of potential acquisitions. Nevertheless, the attractiveness of office assets is expected to improve when broader economic conditions stabilise,” the analysts said.

Here’s more from JLL:

Headline vacancy in the Perth CBD increased 0.1 percentage points (ppts) to 15.9% in Q2 2024. The prime grade vacancy rate also increased 0.6 ppts to 13.2%, driven by the completion of new office stock in Q2 2024.

Net absorption in Q2 2024 totalled 12,030 sqm; a rebound from the previous quarter’s reading of -1,256 sqm. Demand for office space has been steady over the past 12 months, totalling 7,188 sqm, versus the 10-year annual average of 8,564 sqm.

New supply increases over the latest quarter

Capital Square Tower 3 completed over the quarter, developed by AAIG Pty Ltd at the corner of Spring Street and Mounts Bay Road, totalling 15,700 sqm. One other project remains under construction totalling 32,500 sqm, expected to complete in Q2 2025.

Other than developments currently under construction, there are 13 projects in the CBD with plans approved, totalling 328,552 sqm. Nevertheless, proposed new office projects are likely to require substantial pre-commitment to proceed.

Investment activity up in Q2 2024

Prime net effective rents decreased 0.3% in the quarter, to AUD 283 per sqm per annum, with year-on-year growth of 3.0%. Prime net face rents increased 0.4% quarter-on-quarter to AUD 657 per sqm per annum, reflecting year-on-year growth of 2.9%.

Over Q2 2024, Perth CBD prime office yields softened 25 basis points (bps) to a midpoint of 7.38% and secondary yields also softened 25 bps to a midpoint of 8.88%. Similarly, on an annual basis, prime office yields recorded a softening of 25 bps.

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