Next to no availability of high-quality commercial properties and ongoing changes to work habits are combining to push businesses into Perth’s CBD fringe suburbs, where demand remains strong. In this article, we explore some of the reasons why businesses are choosing to shift to Perth’s CBD fringe, and how Sterling Property can help you to capitalise on upcoming opportunities.
Demand is outpacing supply
Any business looking to move wants to secure space in well fitted-out modern office buildings with limited renovation requirements. This leaves little interest for ageing properties, despite some availability. Quality, modern spaces within new developments at Elizabeth Quay are also luring some major tenants out of Perth’s CBD, but the areas they are leaving often need considerable work to meet the standards of new tenants.
In West Perth, demand has been high for the past 12-18 months, with vacancies falling as quality properties are leased almost as quickly as they come on the market. The result, says Sterling Property Principal Partner Brian Neo, is that fringe suburbs such as Subiaco have seen an uptick in interest in response.
“We’re seeing strong demand in Subiaco, especially from small and medium-sized businesses,” he says. “They want to be in this area where there is easy access to parking, transport and amenities, while still having the convenience of being five minutes away from the CBD. But these businesses are also specifically looking for high-quality office spaces, and we can’t fulfil those requirements at the moment because there isn’t enough availability to meet demand.”
Work changes continue to resonate
One of the challenges for businesses looking to relocate is meeting the demands of their employees as well as their clients. For many businesses, the Covid-19 pandemic necessitated a change in where we work – from periods of home working to hybrid arrangements – with many realising they can operate effectively and efficiently with a smaller footprint. To encourage staff back to the office, though, they needed to focus on fit out, attractive and easy-to-reach locations, and proximity to amenities such as cafes, restaurants, gyms and childcare.
The result, Mr Neo says, is that the requirements for office space have been reimagined, with many businesses now pushing east and west of the city in the search for the right fit in Perth’s fringe suburbs. “Areas like Subiaco continue to be attractive locations thanks to the train line, the reinvigorated shopping and restaurant strip, and its close proximity to the city, for businesses looking to lure staff back to the office,” he says.
Subiaco space continues to be snapped up if it meets the criteria businesses are looking for. For example, 388 Hay Street in Subiaco is fully leased and 502 Hay Street has very low vacancy. But will the space shortage last? Mr Neo says greater choice of properties will become available in the next few years, following the announcement in May 2024 of Perth’s biggest planning changes in two decades.
Unlocking floor space in the City and surrounds
New changes to Perth’s Local Planning Scheme 3 will make space for the city to grow over the next 10 to 15 years by boosting floor space capacity across Perth. The scheme introduces significant changes, including a 116% increase in floor space capacity, which will allow for larger offices, apartment towers, and shops. This will be achieved through adjustments to base and bonus plot ratios.
West Perth is expected to see the most development, with a 677% increase in floor space under the base plot ratio system. In contrast, Northbridge will see a modest 36% increase. Central Perth, Claisebrook, and East Perth will also experience substantial capacity growths of 87%, 152%, and 62%, respectively.
Key changes include significant plot ratio increases on St Georges Terrace, Kings Park Road, and Adelaide Terrace. These changes are expected to serve as catalysts for redeveloping older buildings in the area. While the announcement won’t change anything overnight, it is good news for the property sector says Mr Neo. “They’ve increased plot ratios along Kings Park Road and Hay Street to increase density and encourage residential and commercial development, which is a fantastic change for West Perth and one that probably should have happened 10 years ago. These sites can now be used for high-density mixed-use developments, presenting more opportunities in the area which is very positive news.”
Finding the right fit for your business
At Sterling Property, we have over 20 years of experience in the commercial property industry with an in-depth knowledge of the market in Perth’s fringe suburbs including Subiaco and West Perth. If you’re interested in discussing the latest changes in the commercial property market, or how to find the right property for your business, get in contact today or visit us at our Subiaco office.
