Category:   Property Outlook

Date:   14 December 2022

Last Update:   21 May 2024

Perth Commercial Property Review 2023

Click here for our updated commercial property outlook for 2024.

Commercial real estate has been a roller coaster the last few years with the onset and subsequent continuous fluctuations surrounding COVID-19. Although the market has picked up a little more stability this year, rising interest rates and other global issues may impact commercial property in 2023.

In this article we share recent market insights from experts who’ve had their say on national and Perth based commercial real estate for 2023.

Recap: Commercial real estate 2022

Following a strong 2021 in the commercial property market, 2022 was expected to follow suit – and follow suit it did!

Given the rising material costs and global supply shortages, new developments were few and far between, therefore increasing the demand for established properties. This proved excellent for property owners looking to offload. The situation also benefited any new investors who have experienced a more positive cashflow and strong rental yields from commercial leasing.

Since WA reopened its border, commercial real estate in Perth has seen renewed interest from investors located overseas or in the eastern states too.

The only downside was the monthly interest rate rises beginning in May of 2022, however, their impact on commercial real estate in WA has been minimal compared to what we’re seeing over east.

Commercial property review

At a national level, the ongoing interest rate rises are expected to lower commercial property valuations through much of 2023, according to NAB. Additionally, these rising rates make obtaining debt or equity funding much harder, therefore shortages in new developments will continue.

On the plus side, the latest federal budget announced some initiatives that are expected to positively influence the commercial property sector, including:

Growing the workforce

The federal government will aim to reduce unemployment to 3.75% which should improve the amount of leased floorspace. The office sector is likely to be the biggest winner, with vacancy rates beginning to recover quickly in the last 12 months.

Overseas migration levels

After diminishing overseas migration levels in recent years, the government is looking to grow the population in major cities. Increased overseas migration (including international students) will benefit the workforce for many industries, inducing a positive flow-on effect to commercial property.

Although this may only have a minimal impact on commercial property in 2023, the groundwork will be in place for the following years.

Boost to local supply chains

A number of new funding initiatives are being introduced to help local businesses become more self-sufficient. This should increase the demand for commercial floorspace, particularly warehousing and distribution centres. Additionally, these schemes may provide a boost to the construction of new manufacturing facilities.

Infrastructure investment

Amongst the $120 billion worth of total commitments, an additional $17.9 billion has been allocated to the forward infrastructure spend. This funding will assist industrial areas by providing better connections across Australia.

Commercial property review Perth

Compared to the national stage, Perth has been very resilient in the face of many challenges experienced by global economies. As a whole, commercial and industrial markets in WA are in a good place with a strengthening office market and reducing vacancy rate. Rental growth is strong, and investors are capitalising on what is expected to be a period of growth for commercial property in WA.

When it comes to retail locations and hotels, the future is less positive due to subdued international tourism and a reduction in tenant demand.

What’s hot for commercial property in 2023?

Warehousing

Rental growth is expected to exceed 30% in some industries reliant on warehousing, with the last 12 months seeing a growth of 19% already. This growth outlines the massive potential for commercial property in 2023 and beyond, especially warehousing, and is the best it’s been since the early 2000’s.

In Perth, the Welshpool and Belmont areas are prime real estate for warehouses and industrial property. Both buying and leasing are viable options given the excellent transport routes available. See listings.

Offices

Commercial office space is recovering after the downturn of the last two years, with many companies now reverting to face-to-face workspaces. The office vacancy rate is improving across most industries and as unemployment reduces, vacancies in the office should follow suit.

When investing in commercial property, it’s important to note that inflation isn’t always a bad thing. It often means the economy is working hard and business growth is underway. That being said, it’s always wise to speak to a commercial property expert before finalising any office acquisition.

Perth has plenty of excellent offices to consider for your business, with floorspace in Victoria Park, Belmont, and Burswood being a hot commodity. See listings.

Invest in commercial property 2024

If you’re ready to buy or lease a commercial property in 2024, you can’t look past Perth’s south-east corridor. With a huge selection of commercial areas and property types, these suburbs may be the perfect stimulus for business growth.

Ross Scarfone Real Estate are the local experts in buying, selling, or leasing commercial and industrial properties in Perth’s south-east. Our experience in these prime commercial suburbs is unrivalled, so contact us today for guidance in finding the perfect property for your business.