Perth Vacancies will keep rocketing

[MTR]

Hi All
Thought I would post this link, for those interested, what do you think???

http://www.macrobusiness.com.au/2014/02/perth-vacancies-will-keep-rocketing/

 

[sanj]

Ive only skimmed through the article but can confirm that there is definitely some truth to it.

In the past 4 weeks ive been looking for

- 3 bed house/apartment in/very close to the city for myself
- 300-400sqm office in west end of perth/west perth for a friend

i finally signed a lease for an apartment yesterday and, although an extreme example, it is 35% LESS than what the landlord was getting previously. i say extreme because i think they were a bit lucky to be getting what they did previusly but this is still a real drop. looking around, in particular east perth 20-30% drops are pretty common for certain types of properties. around perth i have seen a fair few drops too but certainly not to that extent.


office market is certainly struggling there are HEAPS of offices for lease, often sublease or where tenant has left a newly fitted out premises. looking in buildings where tenant has downsized etc it is obvious that this is not a rare occurance at the moment. west perth is certainly hurting at the moment.

 

[MTR]

Hi Sanj
If this is the case I presume rents will most likely continue to go south.

35% for the Perth apartment is still large drop, oversupply??? Good for you leasing.

 

[sanj]

Hi Sanj
If this is the case I presume rents will most continue to go south.

35% for the Perth apartment is still large drop, oversupply??? Good for you leasing.

Hi Marisa,

there is a massive oversupply of fully furnished and equipped apartments. massive. also is an oversupply of your bog standard finbar east perth apartments but not to the same extent.

in particular F/F ones above say 700/week and below 1500/week where a large % of the market is your upper middle executives.

the place i got dropped 480/week, that has to hurt and i feel for the owners. there is another place i looked at where they have dropped asking price to 1200/week, i suspect they will take 1050/wk and to buy it would cost AT LEAST $1.8m imo. this is for a fully refurbed whole floor penthouse over 200sqm internal with a great layout, quality fitout and incredible views, imagine how much that must be bleeding the owner.

previously i think they got 1450 or 1500 but it could have been more. note, this was only 6 months ago.

im using the lull in the market as time to upgrade my rental property, for an extra $470 or so a week im renting a property significantly better and bigger than where i am now, in terms of purchase price we're talking around $1.3m Vs $500k. also, the price im paying isnt a super cheap price, it is a good deal but imo reflective of where the market is at the moment.

 

[HiEquity]

The office building in West Perth that I spend a fair bit of time in is half empty. I walk past a lot of "for lease" signs to get my lunch every day up the road. The landlord is doing a heap of work in the carpark on end of trip facilities just to jag a small tenant who is insisting on them. Good for me as I ride my bike to work usually.

Incentives are getting ridiculous and it's hard to see where the demand for all the existing spare accommodation is going to come from. I really wonder about Elizabeth Quay now... not to mention the new space that will come with the Northbridge Link.

Just spent a chunk of the morning listening to the guy who wrote this:

http://www.blackincbooks.com/books/dog-days

I reckon it could be worth a read to give some ideas as to where we could go next.

 

[mrdobalina]

I've been to west Perth a couple of times in the past month, and am astounded by the amount of For Lease signs around.

 

[D.T.]

Hi Equity -
Hooning (in a bus ) down St Georges Tce I'm seeing similar. Plenty of 'For Lease' signs about.

Haven't really noticed it on the residential side of things.

 

[Chomp]

I work in West Perth, to be honest I though it was worse last year for lease signs, especially down Hay St towards Subiaco, I think it has improved slightly.

Rents are down for resi though, I had to drop mine on a house and looking at 2 bedders in Mt Lawley, before we were getting $400's now they are being advertised at $370pw.

 

[mrdobalina]

I work in West Perth, to be honest I though it was worse last year for lease signs, especially down Hay St towards Subiaco, I think it has improved slightly.

I can concer with that. Business sentiment down the terrace is certainly more buoyant since mid-Jan than it was in the second half of last year.

 

[Chomp]

Commercial Construction for us has picked up, for the last five years or so I was coming back from the Christmas break stressing about winning work for the upcoming year.

This is the first year I haven't had that problem, builders are still going under though so its a really mixed bag.

 

[MTR]

Perhaps a sign of the times.

This one is a first for me -
I just got a phone call from one of my PM, tenant not paying rent, has lost job.

I have the same scenario with another property tenant lost job and we are now trying to evict them.

Some people facing tough times at the moment, businesses closing shop, scaling down, reducing staff etc.

 

[sanj]

Yup, interesting times. Still heaps of opportunities out there but it's important to be nimble and act quickly at the moment, what might have worked before may not work now etc.

Will be interesting to see if you can lease out the 2 properties at the same price.

 

[MTR]

Yup, interesting times. Still heaps of opportunities out there but it's important to be nimble and act quickly at the moment, what might have worked before may not work now etc.

Will be interesting to see if you can lease out the 2 properties at the same price.

One is Spearwood which I plan to develop and hopefully start within 1 month so fortunately OK with this one.

My guess is rents will be lower. I spoke to PM around Balga area, she said that properties that were renting at $450 now renting at $390 pw.

Things are certainly changing.

 

[DoobyNuts]

Strange indeed. I just bumped up Glendalough townhouse $20 per week no problem and Hammond Park house went from $480 to $550 last month.

 

[Ausprop]

"which was almost impossible to find during the peak years of the boom between 2006 and 2012."

what a ridiculous statement. In 2009 the valuers were slashing their wrists, bemoaning for lease/sale signs everywhere. sound familiar?

west perth is an unfortunate victim (among others) of the govt giving away untold acres out at the airport which turned the airport into one of the biggest commercial developers in town... hard for pricate devlopers to compete against free land. not to mention passing off all the traffic problems so that the govt now has to try and fix all the congestion on the tonkin.

 

[Spades]

It's not only Perth but everywhere...For lease signs these days are dime a dozen.

Office jobs are out sourced os,tough road ahead b4 stability? Imo.

Issues atm in the future will hinder imo,so i'm making the most of now.

Cheers Spades.

 

[Ausprop]

the trouble is we got lazy selling product overseas with a weak dollar - cheap junk may well sell but doesn't necessarily make a good business model. the mining boom gutted those weak industries and they aint coming back. So we better wise up and produce products that people want to buy for reasons other than being cheap. I am not sure there's enough go getta attitude to pull it off, which is why I foresee difficult times

 

[Tulamalula]

Probably a dumb question,but if there are so many apartments for lease and high vacancy rates, why do developers keep building more?

 

[D.T.]

Probably a dumb question,but if there are so many apartments for lease and high vacancy rates, why do developers keep building more?

1) Because the projects began before the figures were released, or
2) Because they already have buyers for the finished product, and thats the end of their involvement.

 

[Rixter]

Probably a dumb question,but if there are so many apartments for lease and high vacancy rates, why do developers keep building more?

Why do people by at the height of a boom and are the last ones left holding the overpriced baby? Thats the million dollar question.

In relation to your developer question, because they are already committed which was brought about by the time frame it takes to get a project from start to finish.