Now that Perth’s office space shortage has reached flash point, developers are pushing ahead with office developments on the city fringe to take advantage of soaring rents.
Now that Perth’s office space shortage has reached flash point, developers are pushing ahead with office developments on the city fringe to take advantage of soaring rents.
Perth’s northern fringe has been the focus of activity in recent months, with property funds management and development group Charter Hall gaining approval for an 11,581 square metre A-Grade office development adjacent to the Hatch building on Stirling Street.
Charter Hall paid $31.5 million for the Hatch building in 2006, and $5 million for the adjoining site.
Now, Burswood-based Taggart Group has swooped on a 2,263 square metre site on Stirling Street, with plans to build a $40 million four-storey office complex.
Taggart general manager development Nick Di Lello told WA Business News it would likely continue to lease the existing office building at 108 Stirling Street for the next four years, before redeveloping it with 7,000sq m of office space.
Mr Di Lello said given the projected demand for office space in Perth, Taggart would build the office complex without securing pre-commitment from a tenant.
“The Stirling Street precinct is an emerging commercial office and residential area. We think there will be more upside in waiting for the office to be built before securing tenants,” he said.
Taggart is also keeping an eye out for privately held brownfield sites in the area with a view to more office developments.
Mr Di Lello said it would look at the office development Charter Hall was planning opposite the site, and ensure the design of its office project was complimentary.
Taggart development director, Darren Taggart, said aside from the shortage of available space, the City of Perth’s vision for the area appealed to the company, which was expanding into commercial development for the first time.
“The fact that council has committed to a 3:1 plot ratio for the site provides an incentive to develop, and should encourage other investors to look more closely at the area and available opportunities,” he said.
Property Council of Australia research indicates the Perth CBD has the lowest office vacancy rate of any Australian capital city at 0.7 per cent, or about 8,800sq m, of space left.
However, this vacancy rate is not expected to ease when nearly 121,000sq m of new stock enters the market in 2009, with some market watchers predicting the rate will fall even lower during the period, before staging a modest recovery to three per cent in 2011.