Perth commercial office vacancies could peak at 16 per cent over the next two years as resources companies focus on cost cutting
Resources companies in Perth are continuing to trim their office space amid predictions the vacancy rate will hit 16 per cent.
Dexus Property Group chief executive Darren Steinberg said despite the mining downturn, his company was very positive about the West Australian resources driven economy.
“There’s no doubt that the mining boom did give it a huge amount of stimulus,” Mr Steinberg said.
“If you go back a few years there was zero vacancy in commercial offices.”
But at that time some companies were taking large amounts of office space and not focusing on costs, he said.
Mr Steinberg said Perth commercial vacancies were now at 12 per cent as new managers focused on costs and as the mining construction phase made way for operations.
“It’ll probably peak out at around 16 per cent over the next couple of years,” Mr Steinberg said.
“You need other drivers apart from mining to drive this economy and pleasingly there are other drivers.”
He also took aim at the Premier Colin Barnett’s $2.6 billion Elizabeth Quay waterfront development project.
“It would’ve been more prudent to spend some on Elizabeth Quay on public transport.”
Commercial office markets would experience pain in the short term, but drivers such as education, and agriculture as well as 700 publicly listed companies would assist in the medium to long term.
Mr Steinberg added that confidence had been knocked around by the May budget and how it was sold.
“Pleasingly though, it has been erratic, but the trend is up,” Mr Steinberg said.
A year ago his company had not received any enquiries about leasing premium office space in Sydney.
“We’ve now done substantial leasing there over the last six months so leasing activity on the ground across Sydney and Melbourne in particular has stepped up quite positively.
“It’s the resources cities of Brisbane and Perth where you’ve got this uncertainty that’s now come in.”
He added that residential construction in WA had reached double digit growth on the back of population increases.