John Bond says Primewest is targeting redevelopments in the city centre and Peppermint Grove.
PROPERTY syndicator Primewest is aiming to leverage the overheating office market in central Perth with plans for a new office building on vacant land surrounding its latest acquisition.
Primewest is understood to have paid about $60 million for 251 St Georges Terrace, which was put up for sale earlier this year following the appointment of receivers to the $500 million Raine Square development in January.
Luke Saraceni’s development partner in the troubled Raine Square project, Hossean Pourzand, owned the nine-storey office block.
The building sits within the Eric Silbert Gardens, and Primewest has identified vacant land on that site that could support an office development of up to 6,000 square metres.
The city leasing market is hurtling towards a zero vacancy rate, and as rents push into record territory Primewest director John Bond said the group had honed its focus on office assets with redevelopment potential.
“251 is an example of that; it’s tired, it needs some work and repositioning and there’s also the potential to build another little office building on the vacant land to the side of it,” Mr Bond told WA Business News.
“We are exploring that heavily now; there is a market right now and we are still doing the numbers but we think we can build a 6,000sqm office building … it’s a great location and there is plenty of demand there.”
Mr Bond said the other advantage of a smaller office development was the planning and construction lead-time could be confined to about three years and didn’t require a huge anchor tenant.
The syndicator has bought more than $250 million worth of property in its preferred markets of Perth and Brisbane in the past 18 months. But with a minimum 15 per cent rate of return on any acquisition, Mr Bond said the quality of any property, as well as its redevelopment potential, was central to its investment strategy.
“Typically we want to buy property at less than replacement cost and if we can do that we are very happy to just buy,” he said.
“But we have also developed an office building in Herdsman and we have built a number of bulky good retail centres.”
The sluggish retail spending conditions have motivated Primewest to investigate a major redevelopment of its Peppermint Grove retail centre, Cottesloe Central.
Primewest has put a proposal to the Shire of Peppermint Grove under which the property would support a major, mixed-use development with a significant residential and office component.
A substantial proportion of the existing centre has been converted into office accommodation to meet growing demand for commercial tenancies in the suburbs as well as offset the weakening retail sector.
Mr Bond said the project was in its infancy and if it didn’t attract community support Primewest was happy with its performance as a retail-office project.
The conversion of the former Grove Plaza shopping centre will require a structure plan that would need to be approved by the WA Planning Commission.
Mr Bond revealed Primewest had made an initial presentation to the council, which he understood was now seeking community feedback.
The redevelopment would require the demolition of the existing centre to make way for office, retail, residential and potentially retirement housing with some higher-density development on the Stirling Highway boundary of the site.
“We have presented to council some thoughts … but they want something to happen because they are under pressure from the state government, like a lot of councils to get more density,” Mr Bond said.
