The Property Council of Australia’s Western Australian chapter has raised concerns with the State Government regarding overcrowding in the city office market.
The Property Council of Australia’s Western Australian chapter has raised concerns with the State Government regarding overcrowding in the city office market.
The council’s written approach to the Government points to a number of private-sector proponents of new buildings, and at least two new government-owned buildings, adding to supply in an increasingly tight market.
The State Government has made clear it intends to revitalise the Old Treasury buildings into a project to include an office tower, and has also mooted a development on the vacant William Street properties demolished for the new William Street train station.
It is understood that expressions of interest for the 0.88 hectares of CBD land known as 140 William Street will be sought from the property development market in mid-September, and that as part of a sale the State Government will commit to occupy offices on the site.
According to LandCorp chief executive Ross Holt, the development site, which is project managed by LandCorp on behalf of the Western Australian Planning Commission, sits above the future William Street underground platforms and will provide great access for shoppers, city workers and business people.
“The location on Murray St Mall close to Forrest Place has some of the city’s highest pedestrian counts,” Mr Holt said. “The possible placement of government office space directly linked to Perth’s modern rail transit system, integrated with retail and other commercial uses, makes good sense.
“It would deliver a sustainable outcome for the site and represents an excellent outcome for the taxpayer.”
Property Council of Australia WA executive director Joe Lenzo said the council believed governments should only intervene in a sector where there was a market failure to provide a good or service.
In the current market, he said, there was no evidence to suggest that the private sector would not be willing or able to provide high-quality office space for government tenants.
“It is important that mooted projects on government-owned land do not cause imbalances in the Perth office market,” Mr Lenzo said.
“The addition of substantial supply on government-owned land can have significant adverse effects on vacancy levels, incentives and rents, given the relatively thin nature of Perth’s office market.
“Governments do not face the same commercial disciplines in their decision-making processes as the private sector.”
Mr Lenzo told WA Business News the creation of uncertainty over supply and rent levels could reduce the confidence of investors in the Perth marketplace, deterring private sector investment that could deliver significant new community facilities and wealth in the economy.
“We have suggested previously that the WA Government could consider a demonstration building in partnership with the private sector,” Mr Lenzo said.
“The WA Government’s involvement would be to tenant the building [not own the building] and harness the skills and initiative of private property owners, developers and service providers to deliver the building.”
The expiry in 2006 and 2007 of a number of large government leases has brought the issue of development on government-owned properties to a head.
More than 60,000 square metres will become available when the leases expire.
Private sector developers currently vying for some of the larger expiring tenancies to anchor new developments include: Luke Saraceni for his Raine Square site; Multiplex and the Griffin Group for 125 St Georges Terrace; Peter Laurence’s Pivot Group for 100 St Georges Terrace; and Hawaiian and Multiplex for the Bishop’s See precinct at 225 St Georges Terrace.
None has yet secured an anchor tenant to underwrite development.
