Quadrant lease deals follow suburbs-to-CBD trend

Leasing success at The Quadrant on William Street has continued a trend of city fringe and suburban tenants moving to the Perth CBD, while options for firms with large space requirements have become increasingly scarce.

Building owner Primewest and commercial agency Sheffield Property Group capped off a successful leasing campaign at The Quadrant by signing three new major tenants – Technip Oceania, the Department of Jobs Tourism Science and Innovation and Jadestone Energy – with the deals covering 11,570 square metres of space.

Primewest acquired the building around 12 months ago for $175 million, at a time it was 63 per cent vacant.

Sheffield Property joint managing director Mark Clapham said the trend of suburban tenants moving to the city was also reflected in recent success at Kings Square, with the KS1 tower now fully leased after St John of God Health Care took up the last remaining vacant space in the building.

“Virtually all of the tenants in that building, around 21,000 square metres of space, was let to non-CBD tenants,” Mr Clapham told Business News.

“It’s a fairly big trend and it's been driven by a number of things.

“There have been higher incentives and much better quality buildings in the city as opposed to the buildings these tenants could move into in suburban locations.”

Mr Clapham said the leasing success at Quadrant, Kings Square, 240 St Georges Terrace and Central Park in recent months had also changed the narrative on the prospects for new building development in Perth’s CBD.

“Those buildings were among the last remaining buildings in town with big chunks of contiguous space,” he said.

“It will be very interesting to see what sort of impact that will have on the Property Council’s vacancy rates.

“At the moment they are sitting on about 18.5 per cent and had dropped from where they were previously, but none of those transactions, some 40,000 to 50,000sqm of transactions, were accounted for in those figures.”

Mr Clapham said any tightening of the vacancy rate, and the scarcity of large contiguous tenancies in the CBD (as reported by Business News last month), had changed the landscape for office developers.

“The outlook is a lot more positive for the development market, there have been some big inquiries out there,” he said.

“The major one is the state government’s EOI for the WA Police.

“That one particularly has brought to the surface a number of development sites to the point that everyone has been working up their plans to bring them to market.

“There is definitely a more positive feeling about getting developments off the ground.”

Also in commercial property this week, West Perth office building Binary at 1101 Hay Street sold for $16.5 million, in a deal brokered by Colliers International.

The asset was sold to a private investment group, with Colliers’ Wayne Lawrence saying the deal was indicative of an increased appetite among investors for Perth office assets.

“We are aware of a number of private family companies in Perth that are keen to invest in offices and have the capacity to transact on office buildings up to $100 million,” Mr Lawrence said.

In the retail sector, Midland Gate Shopping Centre owners Vicinity Centres has added two new retailers to the expanded mall, in department store Harris Scarfe and sports equipment retailer Rebel Sport.

Midland Gate is now home to more than 200 stores, including Aldi, Coles and Woolworths supermarkets, as well as a new JB Hi-Fi, a refurbished Kmart and Big W and Target department stores.

Rebel Sport opened yesterday, while Harris Scarfe will open its Midland Gate store on March 28.

Centre manager Alison Broadbent said the lease deals were the final milestones in Midland Gate’s $100 million expansion.

“As the largest regional shopping centre in Perth’s east, it’s exciting to now offer new and loyal customers even greater convenience, variety and choice in fresh food, fashion and lifestyle and in dining and entertainment,” he said.