Perth market
Occupier activity in Perth has been well above average over the past 12 months. A total of 320,600 sqm of gross take-up has been recorded since Q3 2024 – exceeding levels recorded over the previous 12-month period from Q3 2023 to Q2 2024 (274,500 sqm). Geographically, occupiers still preferenced the East and South precinct, which accounted for 91.6% of all gross take-up over the period. While supply delivery over the past 12 months has been low, accounting for the smallest proportion of supply across Australia (5.0%), the tight vacancy in the market (2.0%) should support new development. The lack of availability in prime grade stock may continue to push tenants towards pre-lease or design and construct options.
Investor demand in Perth has improved significantly over the past 12 months, with transactions totalling 516.8 million. This represents a 50.3% increase on sales volumes recorded over the previous 12-month period from Q3 2023 to Q2 2024 (AUD 343.9 million). As a result of the improved investment environment, prime yields have already commenced the next compression cycle, with average prime midpoint yields tightening by 25 basis points last quarter.
Broader state economic conditions remain positive, largely attributed to the ongoing strength of the resources sector. Consequently, warehouse demand from the logistics, manufacturing and construction sectors should persist and continue to support occupier activity. Rental growth is expected to remain resilient, driven by strong tenant demand and scarcity of existing warehouse supply, albeit on a lower growth trajectory than previous years. Investor demand for prime assets is expected to continue over the medium to long term, particularly if an asset is supported by logistics, manufacturing or construction related tenants.