RESHAPING THE CITY: PERTH
The trends shaping Perth’s CBD carry clear implications. Vacancy and absorption patterns confirm the resilience of the core, while clustering and RTO dynamics highlight ongoing challenges in the fringe.
The decisive factor will be lease expiries: between 2026 and 2028, more than 275,000 sqm of prime space is set to roll, including 193,000 sqm in the core and 76,000 sqm in Divisions 1 and 2. Around 60% of this space sits on lower floors – already the softest part of the market – while higher-floor expiries are concentrated in Divisions 2 and 3, with about 25,000 sqm and 83,000 sqm respectively. This cycle will be the stress test for Perth, determining whether demand consolidates further in the core or whether fringe precincts can reposition. The tightening supply in the core is also gradually reshaping leasing conditions. Rents are trending upward while incentives remain elevated but broadly stable, with many landlords becoming more prescriptive about how these are structured. Lease negotiations have also evolved, with owners pushing back on previously tenant-friendly terms, particularly around annual escalations, option periods and make-good clauses. The shift reflects a market gaining confidence as competition for quality space intensifies. For tenants, expiries create leverage. Softer vacancy outside the core may appeal on cost, but the real opportunity
lies in upgrading – trading lower floors for higher-quality or high-rise space, particularly in the core. Acting early will matter, as the most resilient buildings are likely to be contested. For landlords, expiries sharpen the need to invest. St Georges Terrace remains important, but sustainability, services, and amenity are now equally critical. Divisions 1 and 2 are most exposed: without repositioning, tenants may consolidate into the core as leases roll. For investors, expiries highlight both risk and upside. Core, high-quality assets are positioned to capture flight-to-quality demand, while fringe and lower-floor stock face rising structural vacancy. For policymakers, the expiry profile presents an opportunity to further activate the fringe. Divisions 1 and 2 already contain several high-performing prime assets with solid tenant demand, providing a strong foundation for broader renewal. Strengthening amenity, transport and mixed-use offerings can help spread demand more evenly across these precincts and ease reliance on a limited number of standout assets.
05 RESILIENCE AT THE CORE: REINVENTION AT THE EDGE
CUSHMAN & WAKEFIELD | 19
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