CBD landlords are continuing to invest in their assets to ensure they remain relevant in an increasingly competitive office market.
CBD landlords are continuing to invest in their assets to ensure they remain relevant in an increasingly competitive office market.
AMP Capital has joined a redevelopment push in Perth’s CBD, committing $25 million to upgrade the office building at 140 St Georges Terrace.
The works, which will provide new hospitality and meeting facilities at the ground level, as well as new lifts and bathrooms, add to a rapidly growing list of office buildings in line for redevelopment in Perth, as rising vacancies spur landlords into action.
It follows a $34 million refurbishment completed in 2005.
Development applications for building refurbishments in Perth’s CBD lodged in 2016 total more than $357 million, ranging from new fit-outs to individual floors, to new towers, restaurant precincts and enhanced retail offerings.
AMP Capital Office & Industrial managing director, Luke Briscoe, said the focus of works at 140 St Georges Terrace, a site AMP has owned since 1910, would be on creating a community space.
Mr Briscoe said AMP was working closely with architecture firm Woods Bagot and interior design company IA Group on the revamp.
“It is in the heart of Perth’s CBD and, as such, gets the greatest amount of foot traffic every day,” Mr Briscoe told Business News.
“We are going to put a business lounge in, strengthen the cafe offering, and provide seating for meetings.
“We anticipate that it won’t only service the customers in this building, but people will actually come into the building and use it as a business lounge.”
While Mr Briscoe acknowledged the leasing market in Perth was increasingly difficult, assets recently invested in were doing well.
“Perth is very active, it’s a tough market, but it’s extremely active in terms of the amounts of tenants searching,” Mr Briscoe said.
“A lot of them have been locked up in secondary assets ... those leases are expiring and they can move into prime assets, get better accommodation, a brand new fit-out and pay less than what they were paying the day before.
“But if (owners) don’t spend the money now, you will not get the income and you will not attract the tenants.
“Those tenants that are in the market now will only go to those buildings which have had that capital investment and have those premium services. It’s an absolute necessity to continually invest.”
However, Mr Briscoe said while lower rents were attractive to prospective tenants, they were not the only consideration companies made when looking for new office accommodation.
“One thing is certain, customers, when they’re looking at a space for their business, they’re not chasing the cheapest price,” he said. “For them, they need to find the right solution for their business for the long term, so we need to be certainly market competitive on price, but really provide as many differentiation items as possible.
“For us to leave this building (140 St Georges) as a generic offering means it will be a commodity, therefore we’re competing on price.
“We want to differentiate ourselves and really invest so that this building has a point of difference and people see it as a value proposition.”
Mr Briscoe said AMP Capital had also experienced recent success at Exchange Tower, which it jointly owns with local investment manager and developer Primewest.
A progressive floor-by-floor refurbishment has been taking place since early last year at Exchange Tower, while an $8 million revamp of the ground floor plaza is expected to kick off in coming months.
Three major tenants – Arup, Moore Stephens Perth and Fujitsu – all recently signed leases of more than 1,000 square metres at Exchange Tower, while RSM is expected to take signage rights of the building as well as 3,200sqm.
“If you look at what customers are looking for today, they are still looking for a high-quality building with great services that meets the needs of their business,” Mr Briscoe said.
“They’re looking for location, they’re looking for amenity, and they’re looking for a business partner, i.e. owner, that really wants to work with them and meet their needs.
“The overarching piece they are really looking for is an experience, so their staff loves being in that building and love working for that firm, so they can attract talent.”
