Overview of Commercial Real Estate in Perth
Perth is a flourishing city with a diverse economy and a strong commercial real estate (CRE) market. The city is located on the west coast of Australia and is the capital of Western Australia. Known for its beautiful beaches, scenic waterfront, and warm climate, Perth has become a popular destination for tourists and investors alike.
In the CRE market, Perth has seen a steady growth in demand for prime office space, industrial properties, and retail spaces. This growth has been driven by various factors including an increase in population, infrastructure development, and rising incomes. The demand for CRE is also fueled by the city's proximity to the resources sector, which is a major contributor to the economy of Western Australia.
The CRE market in Perth is supported by a strong legal system and a transparent business environment. Property laws are well established in the city and offer investors extensive protection. This has made Perth an attractive investment destination for local and international investors looking to diversify their portfolio.
In terms of infrastructure development, the city has seen significant investment in transportation, telecommunication, and energy sectors. The government has prioritized infrastructure development as a key driver of economic growth and stability. Major infrastructure projects in the pipeline include the Perth City Link, Elizabeth Quay, and the Forrestfield-Airport Link. These projects have already boosted the demand for CRE in the city.
The office market in Perth has been experiencing a shift towards premium office spaces. Premium office space now commands premium rent, as businesses understand the value of having a modern and efficient office space. In this regard, Perth has been able to keep up with the demand, with the construction of several large office towers, including the Raine Square Commercial Tower, which houses the new flagship office of multinational company, Chevron.
The industrial and warehousing sector in Perth is also growing. The city has various industrial parks and estates that offer investors a range of industrial properties. The growth in the resources sector has also boosted demand for industrial properties, with many companies requiring specialized facilities such as warehouses, processing plants, and logistics centers.
The retail sector in Perth is vibrant and diverse. The city has seen the development of several large-scale shopping centers, including Westfield Carousel, Karrinyup Shopping Center, and the recently opened, Yagan Square. Despite the growth of online shopping, the demand for physical retail space remains strong, and many businesses are still expanding their retail presence in the city.
Overall, the CRE market in Perth is thriving, with steady growth in demand and supply, and new investment opportunities arising all the time. Investors can expect good returns on investment, as the city continues to attract both local and international businesses, and increasingly becomes a hub for innovation and growth in the Asia-Pacific region.
Current Market Trends and Analysis for Perth
Perth's commercial real estate market has seen some significant changes and trends in recent years. The Western Australian capital's office sector was hit hard by the mining downturn back in 2014, but the market has since rebounded strongly. The city's office vacancy rate dropped from a high of 23.7% in 2018 to approximately 17.1% in the fourth quarter of 2020, marking the lowest rate since 2014. Meanwhile, the city's industrial property market has also been robust, with strong demand for warehouses and logistics facilities driving up rents.
One significant trend in Perth's commercial real estate market has been the increasing demand for flexible office space. Over the past several years, co-working and serviced office providers have set up shop in Perth, catering to small and medium-sized businesses that are looking for flexible and affordable office space. Regus, Spaces, and WeWork are some of the biggest providers operating in the city, and there are also several local players such as Spacecubed and The Platform that have made a name for themselves in the market. In 2019, flexible office space reportedly accounted for 2.2% of Perth's total office stock.
Another trend worth noting is the rise of sustainable and green buildings in Perth's commercial real estate market. As climate change becomes an increasingly pressing issue, more companies are looking for office spaces that are environmentally friendly and energy-efficient. Buildings that are designed with sustainability in mind are not only more attractive to tenants but can also help owners and investors save money on energy costs over the long term. Perth has seen its fair share of green building projects in recent years, including the Subiaco Pavilion Market Hall, which features a 96-kilowatt solar array on its roof, and the Kings Square development in Fremantle, which has a 2,500-square-meter rooftop garden that acts as a natural insulation layer for the building.
Finally, it's worth mentioning that Perth's commercial real estate market has been impacted by the COVID-19 pandemic, like almost every other market around the world. However, the effects have been relatively mild compared to other cities in Australia, due in part to the city's strong mining industry and the fact that it was less reliant on international tourism than other cities like Sydney and Melbourne. While the pandemic has slowed down some commercial real estate transactions and caused some uncertainty in the market, Perth's market fundamentals remain strong, and experts predict that the city will continue to be a desirable destination for investors and tenants alike.
Different Types of Commercial Properties in Perth
Perth is the economic hub of Western Australia and is a thriving business centre that offers a wide range of commercial properties. If you are looking for commercial real estate in Perth, it is essential to have a clear understanding of the different types of commercial properties available. In this article, we will discuss the three main types of commercial properties that are available in Perth.
Office Spaces
Office spaces are commercial properties that are designed for businesses to use as their primary location. These spaces are ideal for businesses that require a physical presence, including professional firms such as law firms, accounting firms, and architectural companies. Perth offers a wide range of office spaces, ranging from small offices to multi-level office buildings. Most office spaces in Perth are located in the central business district (CBD) and can be leased or purchased for a fixed period.
The cost of office spaces in Perth varies depending on several factors such as location, size, and facilities provided. Offices located in the CBD are more expensive than those in the suburbs, but they offer better transport connections, access to amenities, and proximity to other businesses.
Retail Properties
Retail properties are commercial properties that are designed for businesses that sell goods or services directly to the public. These properties are ideal for businesses that require high visibility and foot traffic. Perth offers a wide range of retail properties, including shopping centres, standalone shops, kiosks, and pop-ups.
Retail properties in Perth are usually located in high traffic areas such as shopping malls, pedestrian areas, and busy streets. The cost of retail properties in Perth varies depending on their location, size, and facilities provided. Retail properties located in malls and busy streets are more expensive than those in less populated areas. Most retail properties in Perth are leased for a fixed period of time, but some can be purchased.
Industrial Properties
Industrial properties are commercial properties that are designed for manufacturing, storage, or distribution of goods. These properties are ideal for businesses that require large spaces, heavy machinery, and industrial equipment. Perth offers a wide range of industrial properties such as warehouses, factories, and distribution centres.
Industrial properties in Perth are usually located in areas with easy access to major highways and transport links. The cost of industrial properties in Perth varies depending on their size, location, and facilities provided. Industrial properties located in the suburbs are generally cheaper than those in the CBD. Most industrial properties in Perth are leased for a fixed period of time, but some can be purchased.
In conclusion, commercial real estate in Perth offers a range of opportunities for businesses of all sizes and sectors. Whether you are looking for office spaces, retail properties or industrial properties, Perth has something to offer. Understanding the different types of commercial properties available is crucial to finding the right property that meets your business' needs and budget.
Future Growth and Developments in the Perth Commercial Real Estate Market
Perth's commercial real estate market is experiencing continued growth, and this trend is expected to continue in the future. The city's CBD is the primary location of commercial real estate in Perth, with traditional office buildings, retail spaces, and industrial properties being the most popular. However, recent developments in the market indicate there may be a shift in the type of commercial properties in demand. Here are five developments that point towards the future growth of Perth's commercial real estate market.
1. The Rise of Mixed-Use Developments
Increasingly, commercial property developers are focusing on mixed-use developments that feature a blend of residential, retail, and commercial space. This trend is in response to the changing needs of consumers, who are looking for convenience and accessibility. The new developments will enable businesses to offer a more comprehensive range of amenities in their locations, ultimately, making them more attractive and profitable.
2. The Emergence of Office Space Sharing
The dynamic of office spaces is changing, as many entrepreneurs and small business owners are now seeking cost-effective solutions that offer greater flexibility compared to traditional rental arrangements. This has led to the emergence of office space sharing as a viable alternative. Businesses can now share an office space to minimize costs, empower flexibility, and increase collaboration.
3. The Growth of Industrial and Distribution Properties
The boom of e-commerce and online shopping is pushing up the demand for industrial and distribution properties in Perth. Companies want centralized facilities with ample storage space, and good transportation links. This trend is expected to continue, especially as consumer demand for speedy and efficient deliveries increases.
4. The Popularity of Creative Workspaces
The traditional office space model is becoming less popular as younger generations become the dominant demographic in the workforce. Creative workspaces like co-workspaces, arts precincts, and shared workspaces are becoming more popular as they offer greater flexibility, affordability, and more interactive socialization opportunities. These types of workplaces typically feature activities such as gallery events, pop-up shops, and guest speaker series to create a dynamic and collaborative work environment.
5. The Integration of Smart Buildings
Sustainability and smart buildings are becoming a priority in Perth's commercial real estate market. Buildings are being equipped with intelligent systems for optimized energy and heat management, water use, and lighting control. Smart buildings not only help manage energy consumption but can also make occupants more comfortable and productive, resulting in a more profitable leasing experience for businesses.
In conclusion, the Perth commercial real estate market is on a path of continuous growth, and these developments are shaping the future. Investors, developers, and businesses need to keep up with these trends to keep their assets up-to-date with the latest innovations in the industry. As Perth continues to grow and evolve, so too will its commercial real estate market.
