It's a new dawn
Jamie Vine
Over 27 Years Experience in the Flexible Workspace Sector | Making Work a Happy Place since 2010
Having been in Perth for only 6 short years I have never known a normal commercial real estate market, but I think one is on it's way.
I arrived in 2010 and launched Liberty in 2011 at which time tenants were lining up and landlords were being greedy. The market began to soften in late 2012 and then promptly collapsed in 2013. Since 2013 the tenants have been calling the shots.
A landlord's market [with high rents, low incentives and little availability] is not sustainable for tenants; the cost of their accommodation ultimately puts the cost of doing business up and forces their clients to go further afield for their services.
A tenant's market [with low rents, huge incentives, high vacancy and desperate sublets] is unsustainable for building owners and service providers like Liberty as the cost of ownership and service provision far outweighs the price tenants are willing to pay.
It has been a classic boom and bust economy [which I believe has been the backbone of the WA economy for some time!], so will the next cycle be any different? I think it might be.
The market is turning there is no doubt about that, but this time there is so much more new stock on the market and a plethora of development sites lying in waiting ready to pounce that even a really strong recovery will simply balance the market.And that's what we need, right? A balanced market makes property ownership and service delivery viable whilst still being affordable for tenants; Win:Win
If we hadn't gone through the pain of the high vacancy [which has been hugely impacted by new additions to the market] any reasonable recovery would have seen us back in boom and bust territory and providers like Liberty would have been forced to make as much as we could in the good times so that we can survive the bad times. But I believe the recovery [which is on it's way] will simply balance the market and allow Landlords and Service Providers like Liberty to start to charge a fair price for a quality product and Tenants will see a realistic and sustainable increase in the accommodation costs over time without the extremes of the last cycle.
Director Industry Development
8 年I agree - it's been good to see strong growth in education in the CBD as its now affordable and many other industries develop or move back into the City including marketing companies, creative industry and co working spaces.
Facilities Management Services.
8 年Well said Jamie. Perth is still one of the best places in the world to live and work, so we will adapt and prosper.