Industrial Sector Leading Perth’s Commercial Market 2024

While residential property often gets the spotlight, the commercial real estate market also holds lucrative investment prospects.

According to REIWA Research, the industrial sector has emerged as the top performer among Perth’s commercial property markets, including industrial, office, and retail, for the year ending May 2024.

These initial figures are subject to revision as more transactions conclude. This analysis provides a broad snapshot of Perth’s commercial market, and for those currently invested, consulting a REIWA commercial agent is advisable for a detailed market update.

The REIWA Commercial Network Committee also offers guidance for potential commercial property investors.

Industrial Market Insights

The industrial sector is currently outshining other commercial markets. There is a notable demand for larger industrial lots amidst a scarcity of developed land, leading to rising prices—a trend expected to persist.

Sales activity in the industrial sector has surpassed pre-COVID levels in recent years, with prices now exceeding those seen before the economic downturn.

From June 2023 to May 2024, 1,005 industrial sales were recorded, reflecting a 13.4% decrease compared to the previous year. Despite this, the median sale price per square meter rose by 13.3% year-over-year, reaching $2,353 at the end of May.

In Perth, industrial sales were distributed as follows:

• 8.7% between $100,000 and $250,000
• 25.0% between $250,000 and $500,000
• 19.8% between $500,000 and $750,000
• 10.6% between $750,000 and $1 million
• 30.4% between $1 million and $5 million
• 5.5% over $5 million

The South East sub-region led with 258 sales, while the Inner sub-region recorded the highest annual median sale price per square meter at $2,968.

Office Market Overview

The office market has seen less robust performance compared to the industrial sector. Sales volumes are up from pre-pandemic levels, but prices remain lower, though they are on a gradual rise.

Office vacancy rates have remained stable. Notably, the Perth CBD has bucked the national trend by reducing its office vacancy rate from 15.9% in July 2023 to 14.9% in January 2024, the lowest since 2015, according to the Property Council.

As of May 2024, 344 office sales were recorded over the past year, a 1.2% increase from the previous year. The annual median sale price per square meter edged up by 0.8% to $4,239.

Office sales across Perth were categorized as follows:

• 21% between $100,000 and $250,000
• 34.6% between $250,000 and $500,000
• 21.6% between $500,000 and $750,000
• 8.3% between $750,000 and $1 million
• 13.6% between $1 million and $5 million
• 0.9% over $5 million

The Inner sub-region had the highest number of office sales at 145, while the North West sub-region boasted the highest annual median sale price per square meter at $4,652.

Retail Market Trends

The retail market has exhibited greater volatility in prices and sales compared to the industrial and office sectors.

Consumer sentiment significantly impacts the retail market. Rising house prices often boost consumer spending, while higher interest rates tend to dampen discretionary expenditures. Despite property prices increasing, the 13 interest rate hikes have stretched mortgage repayments by about 50%, coupled with rising living costs.

In the year ending May 2024, 139 retail sales were recorded, marking a 6.1% decline from the previous year. The annual median sale price per square meter fell by 11.1% to $4,059.

Retail sales in Perth were distributed as follows:

• 8.1% between $100,000 and $250,000
• 31.6% between $250,000 and $500,000
• 23.5% between $500,000 and $750,000
• 5.9% between $750,000 and $1 million
• 27.2% between $1 million and $5 million
• 3.7% over $5 million

The South West sub-region had the highest number of retail sales at 34, while the Inner sub-region recorded the highest annual median sale price per square meter at $7,333.

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