Weakness in the mining industry and associated service industries ontinue to result in negative demand for office space.
As a result, the vacancy rate has increased to above 20%, placing upward pressure on incentives and reducing rents. Tenants are taking advantage of the current leasing conditions to upgrade to better quality accommodation, including moving from the fringe to the CBD. The supply cycle is now complete, with no new major supply due until 2018, which should allow the demand environment to stabilise.
23,495 SQMTotal Lettable area
2.9 YearsWeighted Average lease expiry
Demand is likely to remain subdued as the market continues to adjust to challenging conditions in the resources industry
Upgrade activity to escalate as tenants make the most of market conditions
Potential for older, poor quality buildings to form a pool of structural vacancy with future demand likely to be concentrated in the Prime grade market