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Perth has elevated itself as the nation’s top competitor on occupancy costs
Perth has cemented itself as a prime player in the commercial property market, recording the highest occupancy costs in Australia.
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While the West Australian capital city’s occupancy costs dropped 27 per cent in the last 12 months, it still managed to beat the other state capitals and even managed to place 35th in the world.
According to CB Richard Ellis’ Global Office Rents report, Perth’s occupancy costs currently sit at US$59.20 ($67) per square foot.
Sydney was the next best placed Australian capital city, ranking 42nd, having moved up six spots over the last six months.
Melbourne also managed to climb the ranking, moving 14 positions to 85th, while Adelaide moved up 13 spots to 107th.
CBRE global research and consulting executive director Kevin Stanley said discounted incentives pushed Sydney below Perth in the global ranking.
“Finer local monitoring reveals rents in most office markets around Australia are now stable and it’s a question of when, not if, they start growing again,” Mr Stanley said.
“Our forecasts suggest Melbourne, Sydney and Adelaide will be the first to post the strongest growth from the second half of 2010,” he said.
James Patterson, CBRE regional director of office services, said rental growth in Sydney and Melbourne was being underpinned by increasing business confidence and a “flight to quality”, as various corporations reviewed new space options.
According to Mr Patterson, Sydney is driven by the financial sector and that market is rebounding quite quickly. “This time last year we didn’t see any deals negotiated north of $700-$750 a square metre net.”
However, we’re now seeing deals being done at rents of $1,000-$1,200 a square metre at the premium end of town.”
In Melbourne, CBRE senior director of office services for Victoria, Hamish Sutherland, said the significant reduction in sub-lease space in the past 12 months was one of the indicators of stronger market fundamentals.
“In Melbourne, economic rents – those that justify new construction – are substantially higher than in previous cycles,” Mr Sutherland said.
“In addition, while Melbourne is forecast to show strong rental growth, this market remains extremely cost competitive – offering considerably lower rents than Sydney, Perth and Brisbane.”
Worldwide, the most expensive locations for occupancy costs were in London’s West End, with an occupancy cost of US$182.94 ($204) per square foot – despite the recent depreciation of the British pound to the US dollar.
Hong Kong (central CBD) and Tokyo’s inner central areas followed London’s lead, registering occupancy costs of US$153.20 ($170) per square foot and US$143.99 ($160) per square foot respectively.
New Zealand fell behind Australia and other countries, with Auckland ranking 139th and Christchurch coming 162nd in terms of having the most expensive office rents. Falling rents and a falling exchange rate contributed to NZ’s ranking, the report said.
