Multiplex and the Griffin Group have lodged a development application for a $450 million commercial development at 125 St Georges Terrace, despite the current lack of an anchor tenant.
Multiplex and the Griffin Group have lodged a development application for a $450 million commercial development at 125 St Georges Terrace, despite the current lack of an anchor tenant.
A significant turnaround in the office leasing market has been cited as prompting the development application, the latest in a series of approvals that has failed to reach construction stage, including one by Kerry Packer, who sold the site to the current owners for $19 million in 2003.
Multiplex and Ric Stowe’s Griffin Group are 50/50 joint venture partners in the project and have claimed to be close to finalising a design for the past six months.
But they have so far been unsuccessful in their efforts to secure an anchor tenant for the office tower, despite increasing activity in the leasing sector and the presence of several major tenants in the market for significant office space.
The development would involve construction of a 28-level office tower containing about 37,000 square metres of office space, four low-rise buildings around a new civic plaza, the restoration of the Newspaper House group of buildings, and a car park with more than 800 bays.
Project spokesman Richard Meadmore said the office tower had been designed to provide the best tenant accommodation in Perth.
“It provides endless opportunity to reconfigure working environments and offers a level of amenity, environmental awareness and aesthetic quality beyond anything else in the country,” he said.
Discussions were under way with several parties, Mr Meadmore said, and that no construction would commence without pre-commitment from tenants.
Property sources say rents being asked are above current premium rental rates in Perth.
Mr Meadmore also acknowledged that spiralling construction costs were a concern and needed to be closely managed.
CB Richard Ellis senior director of office services, and a leasing agent for 125 St Georges Terrace, Andrew Denny, said tenants were being aggressively sought for the stage two office tower part of the project.
“If all goes to plan, stage one, which involves 18,000 square metres of office space, a car park, retail space, and 6,000 square metres of refurbished and upgraded heritage office space, will go ahead at the same time as stage two,” Mr Denny said.
“With the way the leasing market is at the moment, a new building in Perth is desperately needed – there has been record net absorption and we are expecting one of the biggest falls in vacancy Perth has seen for the last six months, and unless this building gets out of the ground Perth will run out of space very quickly.”
Jones Lang LaSalle director of office leasing Nick Van Helden said the Perth office leasing market needed more stock as vacancy rates approached 9 per cent.
“Quite a lot of buildings are reaching 100 per cent occupancy and there is nowhere for big tenants to go when their leases expire; but for a new building you would need the rents to justify construction,” Mr Van Helden said.