Insights from Our Head of Commercial Sales and Leasing – Rocco Demaio
With over 20 years of experience, Rocco Demaio has earned a strong reputation in Perth’s commercial real estate market. Renowned for his expertise in property marketing and his ability to build lasting relationships. Rocco has been a key contributor in numerous successful sales and leasing transactions across Perth. As an active member of the Real Estate Institute of Western Australia, Rocco continues to influence and shape the future of the industry.
The emergence of COVID-19 initially brought uncertainty to the commercial real estate market, leading to anxiety about economic stability. Despite the challenges, including increased vacancies and shifts in tenant behaviour, the market is stabilising as stakeholders adapt their strategies and recognise its resilience.
Leasing Trends and Challenges
Rising interest rates and increasing mortgage costs are driving a shift towards renting, whilst potential buyers are seeking flexibility and financial security in an unpredictable economic climate.
For businesses and investors, owning commercial property offers stability, control, and autonomy, free from the uncertainties of rent increases and landlord constraints.
Conversely, the industrial sector is experiencing challenges due to a surge in demand and limited supply, leading to significant rent increases. This imbalance underscores the need for more industrial development to stabilise rental costs.
Office and Retail Space Dynamics
As businesses embrace remote work and hot-desking, the office leasing market faces lower occupancy rates. This surplus of office space has led landlords to offer substantial incentives, reflecting the need to adapt to changing workplace dynamics and fill vacancies.
Retail spaces are also evolving. Smaller suburban areas maintain high occupancy rates, while larger or less strategically located retail spaces face increased vacancies due to the rise of online shopping. Landlords are offering significant incentives to counter these vacancies, highlighting shifts in consumer behaviour.
Leasing Strategies and Financial Pressures
To attract tenants during uncertain times, landlords increasingly offer rent abatement and rent-free periods, reducing financial burdens and making leases more appealing in a competitive market.
The demand for security has increased, as stability and assurance becomes priorities in both personal and professional environments. Landlords and property managers are also placing a heightened emphasis on accountability, conducting more rigorous tenant vetting to ensure reliability, reflecting a broader focus on security and risk management.
Even with significant financial assets, some individuals may lack the expertise to manage a business effectively. This gap underscores the need to pair financial investment with strong business acumen for long-term success.
A “security bond”—a sum paid by the tenant to the landlord as protection against damages or unpaid rent—can be intimidating, especially for those unfamiliar with its purpose. Clarifying its role can help alleviate concerns.
High vacancy rates create financial pressures for property owners, prompting them to offer more attractive lease terms, incentives, or adjust rental rates to reduce vacancy durations.
Business owners increasingly feel a loss of control due to financial pressures, prompting them to reassess strategies, operational costs, and adapt to the changing economic landscape.
