Perth office rents to grow by 6% annually until 2029

There is robust demand but only a limited supply.

In a recent report, JLL noted that a limited office supply pipeline in Perth coupled with robust base office demand will support the acceleration in prime net effective rent growth, forecast to average an annual growth rate of 6.0% from 2025 to 2029.

“As broader economic conditions continue to stabilise, the attractiveness of office assets is expected to improve. Investors are likely to still be selective in terms of potential acquisitions, albeit to a lesser extent than 12 months ago,” the report said.

Here’s more from JLL:

Headline vacancy in the Perth CBD increased 0.1 percentage points (pps) to 15.8% in Q4 2024. The prime grade vacancy rate also increased 0.3 pps to 13.3%, driven by contractionary activity by both small and large occupiers (>1,000 sqm).

Net absorption in Q4 2024 totalled -2,300 sqm; a decline from previous quarter’s reading of 2,900 sqm. Despite the slowdown in Perth CBD office demand and net absorption falling below the 10-year quarterly average of around 2,100 sqm, annual net absorption remains positive.

New office supply additions are expected to remain low

No major projects completed over the quarter. However, two projects in the Perth CBD remain under construction, totalling 37,400 sqm, with both expected to complete in 2025.

Other than the projects currently under construction, there are 11 projects in the Perth CBD with plans approved, totalling 299,800 sqm. Nevertheless, proposed new office projects are likely to require substantial pre-commitment to proceed.

Uplift in investment activity over the quarter

Average prime net face rents increased 0.5% quarter-on-quarter to AUD 663 per sqm p.a., reflecting year-on-year growth of 2.0%. Average prime net effective rents increased 0.5% quarter-on-quarter to AUD 286 per sqm p.a., with year-on-year growth of 1.4%.

Perth CBD prime office yields were stable over Q4 2024 at a midpoint of 7.38%, with secondary yields also stable at a midpoint of 9.00%. On an annual basis, prime office yields have decompressed 25 bps.