The Perth Central Business District's office vacancy rate reached a significant 17 per cent in mid-2025, according to the latest Office Market Report from the Property Council of Australia. This figure positions Perth as the capital city with the second highest vacancy rate, trailing only behind Melbourne. Simultaneously, the city is grappling with a well-documented and pressing housing shortage, where the supply of apartments is consistently failing to meet the escalating demand from residents and newcomers alike.
The Seemingly Obvious Solution
On the surface, the solution appears straightforward and logical: transform these underutilised office buildings into much-needed residential accommodation. The appeal of this adaptive reuse strategy is particularly strong for Perth's ageing secondary-grade office stock, which struggles to compete with newer, premium developments. A collective flight to quality among commercial tenants has left substantial vacancies in older buildings, many of which may never return to full occupancy as traditional office spaces.
Converting these structures sounds like an elegant and efficient answer to Perth's housing supply woes. However, the reality is considerably more complicated than it initially seems. Physical and financial constraints often render such conversions impractical or even impossible, despite the clear need for more housing options in the metropolitan area.
Significant Physical Hurdles
Most office buildings were fundamentally designed for commercial use, not for people to live in. The architectural requirements differ dramatically between office and residential purposes. Key factors such as floor-to-ceiling heights, access to natural light, ventilation systems, and floor plate designs present major obstacles.
Office spaces can function effectively with deep floor plates and reliance on artificial lighting. In contrast, residential apartments require ample natural light and ventilation to create liveable, healthy environments. Buildings designed around central cores with limited external wall space struggle to provide the windows and natural airflow that residents demand for comfortable living.
Plumbing and Structural Challenges
Bathroom and kitchen plumbing represents another significant challenge in conversion projects. Office buildings typically feature minimal wet areas clustered in specific locations, whereas residential apartments require plumbing infrastructure distributed throughout the entire building. This often necessitates extensive and expensive structural work, potentially involving major modifications to the building's core framework.
In many cases, taking a building back to its basic frame and rebuilding it as residential accommodation can cost nearly as much as complete demolition and new construction. This is particularly true when addressing complex structural requirements, updating services, and ensuring compliance with modern residential building codes and standards.
Financial Viability Questions
The financial numbers need to stack up convincingly against the alternative of simply building purpose-designed residential developments from scratch. Where office-to-residential conversion does prove successful tends to be for specific accommodation types rather than traditional apartments. Recent local examples include Campus Perth and Hostel G, where former office buildings were successfully converted into student accommodation and hostel facilities.
These alternative accommodation types can better adapt to existing spatial constraints. Shared facilities and smaller private living areas make conversion more financially viable while still addressing housing needs for specific population segments. Student accommodation and short-term lodging can work within existing building limitations while contributing to solving Perth's broader housing challenges.
Environmental and Urban Benefits
Despite the challenges, office-to-residential conversion may still play a valuable role in Perth's housing solution strategy. The city's elevated office vacancy rate represents a genuine opportunity for creative urban renewal. Beyond adding much-needed housing supply, adaptive reuse delivers superior environmental outcomes compared to demolition and new construction.
Converting underutilised office buildings can also help activate urban precincts outside traditional working hours, contributing to more vibrant and safer city environments. The question isn't whether office-to-residential conversion can work in Perth, but rather which specific buildings are suitable, for what particular uses, and at what financial cost.
The conversation continues as Perth seeks innovative solutions to balance its commercial property market challenges with its urgent housing supply needs.
