Students, freelancers, technology start-ups and medical practitioners are replacing resources workers in Perth ‘s office buildings, according to our recent Perth CBD Office Tenant Census.
The Report identified the occupancy and vacancy of each of the 278 office buildings across the CBD.
The Report found that since the peak of iron ore spot prices in 2012, nearly 150,000 sq m of office space has been vacated directly or indirectly as a result of the slowing resources sector.
Given the outlook for commodity prices and investment in new projects, increasing tenant diversity in the CBD tenant base is critical. The cyclical nature of the resources sector means that it is likely to take years before we see a full recovery. In the interim, we need to identify emerging sectors of the economy and facilitate their growth as office space occupiers in the CBD.
Similar to the east coast, and to office markets globally, four industries are the focus of growth in Western Australia’s post resources boom economy – education, medical, technology and shared work spaces. These sectors collectively occupy 6.3% of CBD office space, up from 4.6% in 2012.
Since 2012, education providers have been the stand out sector in terms of office space occupancy – collectively occupying nearly 40% more CBD office space. Universities have expanded their occupancy in the Perth CBD, underscored by Curtin University’s new law school on Murray Street. Major education provider, Navitas, relocated from Mount Pleasant into the Perth CBD as did Murdoch College at 50 William Street. This high school taking a long term lease is an example of the adaptive reuse of an older, vacant office building that will be required over the next decade.
In the future, we are likely to see more classrooms instead of cubicles in Perth’s CBD office buildings due to:
- The growth of inner city residents which will likely require State Government school presence by the end of the decade.
- The recent City of Perth Act which should encourage greater collaboration between the University of Western Australia and major CBD office occupiers and
- Growth of the private college network in Western Australia.
Growing our education sector will benefit more than the CBD office market. Increasing international students will increase demand for residential property. With our growing stock of inner city apartments, encouraging students to live and learn in Perth should become one of our key economic strategies as should increasing student accommodation options.
Given our geography and educational assets, Perth has an opportunity to become the boarding school of our region. Currently a small percentage of international students choose to study in WA. According to the Federal Government, the value of the international student market in Australia was worth $17 billion dollars in 2014. Just 7.4% of the market is spent in Western Australia, despite our proximity to the regions’s student base. If we increase the proportion of international students in West Australian universities from its current 14.1% to 20%, this would create demand for 7,124 beds.
Post the resources boom, the Perth CBD is changing.
A focus on education, technology and medical users will see Perth truly graduate to the global city it aspires to be.
Coverage of the Report from the West Australian, can be accessed: HERE
The Perth CBD Office Tenant Census are available to order. Copies of the order form can be downloaded: HERE
About the Author
Damian Stone is the Chief Problem Solver of Y Research which specialises in providing independent research and analysis on West Australian commercial property.
Y Research produces a series of regular reports on Western Australia’s commercial office, retail, apartment and industrial markets, as well as providing consultancy services to a range of Government and private clients.